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Hold the phone! Why Telstra (ASX:TLS) could be a dividend share to buy

Is it time for income investors to buy Telstra’s shares?
The post Hold the phone! Why Telstra (ASX:TLS) could be a dividend share to buy appeared first on The Motley Fool Australia. –

If you’re wanting to add some ASX dividend shares to your portfolio, then it could be worth considering Telstra Corporation Ltd (ASX: TLS) shares.

Why could Telstra be a dividend share to buy?

Telstra could be a dividend share to buy due to its outlook being the best it has been in over a decade. This is being underpinned by the successful execution of its transformative T22 strategy and the growth targets included in its new T25 strategy.

In respect to the latter, Telstra is aiming for sustained growth and value by targeting mid-single digit underlying EBITDA and high-teens underlying earnings per share compound annual growth rates (CAGR) from FY 2021 to FY 2025.

Telstra’s CEO, Andrew Penn, commented: “T22 has been one of the largest, fastest and most ambitious transformations of a telco globally and today we are a vastly different company.”

“This means we are poised for growth as our society and economy increasingly digitises and we all work, study, transact and get our entertainment online. These fundamental shifts, together with T25, will underpin our future growth and shareholder value,” he added.

The response

These plans went down well with analysts, and particularly the team at Goldman Sachs. The broker believes Telstra is well-placed to grow its dividend in the coming years and is forecasting its first increase in almost a decade.

Goldman has pencilled in fully franked dividends per share of 16 cents for FY 2022 and FY 2023, before an increase to 18 cents in FY 2024 and then 19 cents in FY 2025.

Based on the current Telstra share price of $4.02, this implies yields of 4%, 4.5%, and then 4.7%, respectively.

Goldman also sees upside potential for the company’s shares. The broker has a price target of $4.40, which suggests the Telstra share price could rise almost 10% from current levels.

The post Hold the phone! Why Telstra (ASX:TLS) could be a dividend share to buy appeared first on The Motley Fool Australia.

Should you invest $1,000 in Telstra right now?

Before you consider Telstra, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Telstra wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

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The Telstra (ASX:TLS) share price keeps rising. What happened in November?

These 3 ASX 200 shares are topping the volume charts on Thursday

These 3 ASX 200 shares are topping the volume charts this Wednesday

Will its energy expansion drive the Telstra (ASX:TLS) share price to new heights?

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 no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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