If you are fortunate to have $5,000 available to invest in the share market this month, then would it be worth putting those funds into Telstra Group Ltd (ASX: TLS) shares?
Let's take a look and see what could happen to a $5,000 investment over the next 12 months.
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Investing $5,000 in Telstra shares
Telstra is of course Australia's leading telecommunications and technology company, offering a full range of communications services and competing in all telecommunications markets. It currently provides approximately 22.5 million retail mobile services and 3.4 million retail bundle and data services.
Despite delivering a strong performance operationally over the last 12 months, its shares have underperformed the market.
During this time, its shares have lost almost 12% of their value. As a comparison, the ASX 200 index is up approximately 6% over the same period.
In fact, things have been so dire that Telstra's shares are currently trading within a whisker of a multi-year low at $3.76.
This means that if you were to invest $5,000 (and an additional 80 cents) into the telco giant's shares, you would end up owning 1,330 units.
Let's now see what they could be worth this time next year.
Big returns to come?
Although the market is seemingly not overly enamoured with Telstra shares right now, that's not the case in the broker community. Almost every major broker currently has the equivalent of a buy rating on its shares at present.
One of those is Goldman Sachs. For example, according to a recent note, its analysts have a buy rating and a $4.55 price target on its shares.
This implies a potential upside of 21% for investors and would value those 1,330 units at $6,051.50. This represents a return of $1,050.70 on our original investment.
Don't forget the dividends
In addition, the broker is expecting fully franked dividends per share of 18 cents in FY 2024 and 19 cents in FY 2025. This equates to yields of 4.8% and 5%, respectively.
While the interim dividend for FY 2024 has been and gone, investors buying Telstra shares now would receive dividends of 18.5 cents over the next 12 months (FY24 final and FY25 interim dividends) if Goldman is on the money with its recommendation.
This means that those 1,330 units would yield dividend income of $246.05.
In total that would mean a return of $1,296.75 or approximately 26% from our original $5,000 investment. Not bad!
Here's hoping that Goldman Sachs' recommendation plays out accordingly!
