Australia Markets close in 1 hr 31 mins

Why Telstra shares could be good value right now

Kenneth Hall
Telstra shares

Telstra Corporation Ltd (ASX: TLS) shares have been under pressure in recent years. 

The Aussie telco has seen its share price decline by 36.56% in the last 5 years as earnings have fallen lower.

Why have Telstra shares been falling lower?

The biggest factor hurting Telstra shares continues to be the rollout of the National Broadband Network (NBN).

NBN Co. has been given a prime market position by the Australian Government and left Telstra scrambling for ways to boost earnings.

Consistent dividend cuts and a change in dividend policy have seen Telstra investors head for the exits.

Telstra shares have been widely held across Australian portfolios and the company was known for its policy of paying out 100% of profits to shareholders.

However, Telstra is now yielding 2.77% which, while handy, is not among the top dividend stocks right now.

Why could Telstra be good value at the moment?

One big thing Telstra has going for it is the company’s potential 5G network rollout.

Telstra is well-positioned to capitalise on the 5G opportunity following the withdrawal of TPG Telecom Ltd (ASX: TPM) last year.

Telstra shares could be boosted higher today after an article in the Australian Financial Review (AFR) citing NBN Co concessions to the telco.

The article reports that NBN will give retail service providers more bandwidth and higher speeds at no extra cost. Telstra and Optus believe the wholesale NBN pricing is too high and want more freedom and better service.

Telstra, Optus and TPG act as NBN resellers while NBN Co remains the wholesaler selling access to the infrastructure.

Should you buy Telstra today?

Telstra shares still trade with a market cap of $42.9 billion and are well inside the ASX 50.

Telstra has a price-to-earnings (P/E) multiple of 20x, which is cheaper than TPG (35x earnings). The company also has a higher dividend yield and stronger capital gains in 2019.

The post Why Telstra shares could be good value right now appeared first on Motley Fool Australia.

Here are 3 great ASX dividend options that could be a better option than Telstra right now!

Top 3 Dividend Shares To Buy For 2020

When Edward Vesely -- our resident dividend expert -- has a stock tip, it can pay to listen. With huge winners like Dicker Data (up 147%) and Collins Food (up 105%) under his belt, Edward is building an enviable following amongst investors that are planning for retirement.

In a brand new report, Edward has just revealed what he believes are the 3 best dividend stocks for income-hungry investors to buy now. All 3 stocks are paying growing fully franked dividends giving you the opportunity to combine capital appreciation with attractive dividend yields.

Best of all, Edward’s “Top 3 Dividend Shares To Buy For 2020” report is totally free to all Motley Fool readers.

Click here now to access this free report.

More reading

Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019