Is it too late to buy Telstra shares for its dividend
The post Should you buy Telstra (ASX:TLS) shares in August 2021 for the dividend yield? appeared first on The Motley Fool Australia. –
When it comes to buying shares for dividends, Telstra Corporation Ltd (ASX: TLS) shares are traditionally among the most popular options for investors.
But with the Telstra share price up a massive 25% in 2021 (even outperforming Afterpay Ltd (ASX: APT) shares), income investors may be wondering if it is still a good option.
Should you buy Telstra shares in August for the dividend yield?
The good news is that despite Telstra’s shares smashing the market this year, the forecast yield on offer is still very attractive. Particularly in comparison to the ultra low interest rates on offer with savings accounts and term deposits.
According to a note out of Goldman Sachs, its analysts believe Telstra is well-placed to continue paying a 16 cents per share fully franked dividend until FY 2023. Based on the current Telstra share price of $3.78, this will mean a yield of 4.2% for investors.
But it gets better. After years of dividend cuts, Goldman believes a long-awaited dividend increase is coming in FY 2024. Its analysts have pencilled in a fully franked 18 cents per share dividend that year.
Based on where its shares are trading today, this implies a 4.75% dividend yield for investors.
Are its shares good value?
In addition to offering investors a generous yield, Goldman Sachs sees value in Telstra shares at the current level.
Its analysts have a buy rating and $4.20 price target on them at present. This implies potential upside of 11% over the next 12 months. Combined with its dividends, this will mean a potential total return of greater than 15%.
And that’s not including its plan to return upwards of $1.4 billion to shareholders following the sale of 49% of its Towers business for $2.8 billion.
All in all, even though the Telstra share price has been on fire since the start of the year, it doesn’t appear to be too late to invest for dividends.
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 James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO and Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.