One broker gives its opinion.
The post Is your money safe in Telstra (ASX:TLS) shares right now? appeared first on The Motley Fool Australia. –
Is your money safe with Telstra Corporation Ltd (ASX: TLS) shares right now? The Telstra share price has certainly been a good performer of late. At yesterday’s closing share price of $3.73, Telstra is now up 23.9% year to date in 2021 so far, and almost 40% above its 52-week low of $2.66 which we saw back in October last year. Those returns don’t include Telstra’s generous 16 cents per share annual dividend either.
But after such a robust performance over the past few months, is your money still safe with Telstra, given the company is trading fairly close to its current 52-week high of $3.79?
Well, let’s look at what has been driving the Telstra share price to these new heights lately first. Fears that Telstra would have to cut its cherished dividend were partly behind the company’s slump last year. The ongoing commitment the telco’s management has shown to preserving this dividend at the current level seems to have not gone unnoticed by investors.
When Telstra all but committed to holding its dividend at 16 cents per share over 2021 in October last year, it seemed to put investors’ fears to rest, seeing as Telstra rose more than 8% over the subsequent month.
But more recently, it has been the talk of asset sales that have given Telstra another boost. Late last month, the telco announced that it had sold 49% of its InfraCo Towers business to a group of institutional investors, headed by none other than the Future Fund.
This has further boosted sentiment around Telstra, evidenced by the fact that the telco is up almost 4% since this announcement.
But what about Telstra shares at their current level. Is there further to climb?
Is your money safe in Telstra shares today?
One broker who thinks money is safe in Telstra right now is investment bank Goldman Sachs. Goldman currently has a ‘buy’ rating on Telstra shares, and a 12-month share price target of $4.20.
For this rating, Goldman notes that pricing competition in the Telstra-dominated mobile market is loosening. Further, Goldman expects Telstra to “meaningfully” grow its average revenue per user (ARPU) across FY21-23, helped by expected price increases in FY22. It’s also pleased about Telstra’s ongoing 5G rollout.
If Goldman’s target does come to pass, investors would enjoy a potential gain of 12.6% on Telstra’s last share price (not including dividend returns either).
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 May 24th 2021
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Motley Fool contributor Sebastian Bowen owns shares of Telstra Corporation Limited. 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.