Why is Macquarie so bullish on Telstra shares?

This top broker foresees 11% share price growth over the next year.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points
  • Telstra shares are up 0.84% to $4.18 apiece today 
  • Top broker Macquarie foresees 11% share price growth over the next year
  • The broker also forecasts a fully franked full-year dividend of 17 cents per share in FY23

Telstra Group Ltd (ASX: TLS) shares are in the green today, up 0.84% to $4.18 apiece.

Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is in the red, down 0.4% in late afternoon trading.

One top broker thinks Telstra stock has a ways to go, tipping 11% growth over the next year.

Let's find out why.

Concept image of a businessman riding a bull on an upwards arrow.

Image source: Getty Images

Top broker backs Telstra shares for 11% growth

As my Foolish colleague James reported yesterday, Macquarie has put Telstra at the top of its example income portfolio for new investors.

Macquarie has designed its 'model portfolio' to deliver higher earnings certainty, backed by strong cash flows and dividend income with franking credits.

So, Macquarie obviously thinks Telstra is the best stock pick for this criteria.

Telstra shares form the largest holding in the portfolio, with a weighting of 8.8%.

The broker has an outperform rating on the stock with a 12-month price target of $4.64.

And what about Telstra dividends?

Macquarie forecasts a fully franked full-year dividend of 17 cents per share in FY23.

Based on the current Telstra share price, this represents a dividend yield of 4.06%.

Speaking of dividends, if you want to grab the latest payout, you'll need to buy Telstra stock before the ex-dividend date of 1 March.

The telco will be paying a fully franked interim dividend of 8.5 cents per share on 31 March.

Another top broker, Goldman Sachs, is also bullish on Telstra stock.

After the company delivered its half-year earnings report last week, Goldman reiterated its buy rating and kept its 12-month price target at $4.60.

Goldman commented:

Telstra is tracking towards the top end of its FY23 EBITDA guidance range, given the strong 1H23 result and a range of sequential benefits in 2H …

Despite the stronger 2H, we expect an 8.5c DPS (67%/100% EPS/FCF payout) before growing to 9c in FY24.

Motley Fool contributor Bronwyn Allen has positions in Macquarie Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has positions in and has recommended Macquarie Group and Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Broker Notes

Red buy button on an Apple keyboard with a finger on it.
Broker Notes

Brokers name 3 ASX shares to buy right now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A smiling woman holds a Facebook like sign above her head.
Broker Notes

Why these ASX shares are rated as buys in April

Let's see what makes them bullish on these names right now.

Read more »

Australian dollar notes in the pocket of a man's jeans, symbolising dividends.
Broker Notes

Are CBA shares still a good buy for passive income?

A leading analyst delivers his verdict on CBA’s passive income appeal.

Read more »

A financial expert or broker looks worried as he checks out a graph showing market volatility.
Broker Notes

Morgans names 2 ASX shares to buy and 1 to accumulate

What is the broker recommending investors do with these shares?

Read more »

A man in a business suit rides a graphic image of an arrow that is rebounding on a graph.
Broker Notes

2 ASX 200 shares to buy ahead of anticipated rally: expert

After a 9.1% drop between 27 February and 23 March, the ASX 200 reversed course last Tuesday.

Read more »

A group of people in a corporate setting do a collective high five.
Broker Notes

3 reasons to buy Ramsay Health Care shares today

A leading analyst expects Ramsay Health Care shares to keep outperforming in the months ahead.

Read more »

A woman presenting company news to investors looks back at the camera and smiles.
Broker Notes

Bell Potter says this ASX 200 stock can rise 38% and pay a 6% dividend yield

Major upside and a generous dividend yield could be on offer with this name.

Read more »

Middle age caucasian man smiling confident drinking coffee at home.
Broker Notes

Is this ASX defence stock the next DroneShield?

Bell Potter thinks this stock could be the next to rocket. Let's find out why.

Read more »