How much could $10,000 invested in Telstra shares be worth next year?

What do analysts think this telco giant's shares could be really worth?

| More on:
A man casually dressed looks to the side in a pensive, thoughtful manner with one hand under his chin, holding a mobile phone in his hand while thinking about something.

Image source: Getty Images

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

If you are lucky enough to have $10,000 burning a hole in your pocket, you might want to consider putting it to work in the share market.

After all, with the share market providing investors with a 10% per annum return over the long term, it could turn that money into something much larger in the future if you have no immediate use for it.

With that in mind, let's now see if Telstra Group Ltd (ASX: TLS) shares would be a good option for those funds.

Are Telstra shares a good option?

It is fair to say that the telco giant has not been a great place to invest over the last 12 months.

Over this time, the company's shares have lost 16% of their value. This compares to a 6.3% gain by the ASX 200 index.

Though, it is worth noting that this decline has little to do with Telstra's performance and more to do with interest rates. As Telstra's shares are treated like a bond proxy by many investors, demand falls when rates rise.

But that was then. What about now? Could an investment in Telstra shares deliver strong returns over the next 12 months? Let's find out.

What could $10,000 become?

Firstly, if you were to invest $10,000 (and $1 more) in the telco giant, you would end up owning 2,740 shares at the current share price of $3.65.

According to a recent note out of Goldman Sachs, its analysts believe the company's shares are undervalued at the current share price. That note reveals that the broker has put a buy rating and $4.55 price target on the company's shares.

This means that if your 2,740 Telstra shares rose to that level, they would be worth $12,467. This is almost $2,500 or 25% greater than your original investment.

But the returns shouldn't stop there. Telstra is historically one of the more generous dividend payers on the Australian share market and Goldman expects this to remain the case in the future.

The broker is forecasting a fully franked dividend of 18 cents in FY 2024. This represents a 4.9% dividend yield and will boost the value of your investment by $490 if you reinvest the income.

In total, this would mean that a $10,000 investment in Telstra shares becomes worth $12,957. That represents a total 12-month return of almost $3,000 or 30%, which is approximately triple the average market annual return.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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 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 Communication Shares

A man looking at his laptop and thinking.
Communication Shares

Why is the Aussie Broadband share price slipping on Wednesday?

After opening higher, the Aussie Broadband share price has slipped into the red.

Read more »

Two elderly men laugh together as they take a selfie with a mobile phone with a city scape in the background.
Communication Shares

Why Telstra shares could be dirt cheap in May

Goldman Sachs thinks the telco giant is undervalued at current levels.

Read more »

Ordinary Australians waiting at the bus stop using their phones to trade ASX 200 shares today
Communication Shares

What does the latest 3G news mean for Telstra shares?

Telstra shares aren't budging from their new 52-week lows this week...

Read more »

A man in shirt and tie uses his mobile phone under water.
Communication Shares

The Telstra share price sank 5% in April and is now at 2-year lows. Time to buy?

With the Telstra share price at two-year lows, is now the time to buy the ASX 200 telco?

Read more »

A smiling young surf life saver at the beach shouts out on a megaphone.
Communication Shares

Telstra shares could reach $4.25 in 2025!

These experts aren't messing around on Telstra shares right now.

Read more »

Two laughing male executives wearing dark suits chat across a timber lunch room table while one of them holds up his phone to show information.
Communication Shares

TPG shares rise after Optus answers partnership call

TPG is calling on Optus to solve its regional network requirements.

Read more »

Health professional looking at a laptop.
Communication Shares

Own Telstra shares? A division may soon be offloaded!

Australia’s biggest telco is considering making itself a bit smaller.

Read more »

A man sits in contemplation on his sofa looking at his phone as though he has just heard some serious or interesting news.
Communication Shares

ASX 300 stock down 24% since March now offers 'compelling value'

A fund manager has picked out this stock as a good opportunity.

Read more »