What do you think - will it break through the $5.10 level? Personally I doubt it at this time, but not sure at all. The monthly chart shows the roughly $5 level is super resistant to Telstra. It has tried to break above that level for 11 years, achieving only a fake break-out for a couple of months in 2005. Monthly momentum is showing that the price action is just coming off extreme overbought level. Price has a bit more room to move on the weekly and daily charts, but momentum divergence looks like showing up there = warning. Oddly, Motley Fool Share adviser is tipping TLS this month on future fundamentals. Thinks there's now growth potential. Other seasoned commentators like Geoff Wilson are still talking about the 'bubble' in safe dividend stocks Hat's off to Nukz here who was pointing to Telstra back in May 2012 and reading the market desire for safety and yield very correctly. Telstra back then was $3.50 - 3.75. It's now $5, and the stock has also paid two, soon to be three, dividends since then. http://forums.silverstackers.com/topic-26261-my-low-end-targets-slr-ncm-evn-kcm.html Nukz 2012-05-09 "Not many people here have mentioned this before but TLS has got to be one of the best hedges against any fear in markets you could easily argue better than precious metals as of recent times. "... personally i like them because they're sitting on a mountain of cash, they pay a quite nice div, and so far the last 12 month performance has been up 35%." Nukz 2012-05-15 "Once again take a look at TLS, it's working as a hedge against falling markets." All Data Monthly Chart Telstra (TLS)
I'm clueless about it LD, so I'll sneak in a big excerpt from this month's Motley Fool's Share Advisor. I've left some bits out like the preamble and a few paras on risks of investing in TLS. Hopefully they won't mind as it's not the whole newsletter and is a bit of an ad for them. TELSTRA BY SCOTT PHILLIPS The 400-pound gorilla of the telecommunications space has an enviable brand and mobile network and an improving customer count. Why Buy: Mobile data will continue to explode, and the fastest and largest mobile network gives Telstra a three-length head start. A combination of an attractive dividend and nice price makes this a great time to add Telstra to your portfolio. 1997 ..... Since then, Telstra has become a vastly different business. Costs have been cut, governments were agitated against and then placated, mobile telephony has skyrocketed, and the then-nascent internet has become mainstream and mobile, with higher connection speeds and ever-faster computing power putting the world quite literally in our hand. Before we move to the rest of the investment case, though, we need to deal with the National Broadband Network. Telstra in 2013 still carries some legacy assets from its long history, including its declining but still very profitable fixed line (read: home phone) business, as well as using those same assets to connect homes and businesses to the internet. That will change if the Labor government is re-elected and continues to implement the National Broadband Network, which would assume Telstra's copper network, including its fixed telephony and internet services, under its Fibre To The Premises plan. Under a Coalition government, the terms of an alternative NBN remain unclear, with a Fibre To The Node strategy leaving Telstra potentially controlling part of the existing copper network or ceding it to the government on acceptable terms. In any event, comments from the Coalition suggest that Telstra and its shareholders will be no worse off should it win government later this year, and some analysis suggests Telstra may be in a slightly better position. Hidden in Plain Sight Telstra is far from the sleepy old business it used to be. True, for a while yet it will retain its legacy fixed line business a business which provides highly profitable if declining revenue for the company but Telstra isn't your grandmother's phone company any more. Not that you'd know it by looking at the results. Telstra's reported numbers look pedestrian by any measure. Sure, the absolute dollars are huge it turned in revenue of $12.5 billion for the first half of the financial year and net profit of $1.6 billion but the revenue growth of 1.0% is pretty anaemic, even if profit growth of 8.8% was pretty good. So how is it that we can get interested enough in 1.0% growth to make it this month's 'best of the best' stock recommendation, we hear you ask? We're glad you did. Revenue Is Flat for Now The bad news for Telstra is that the number of fixed phone lines continues to decline. The company reported that 151,000 phone lines were disconnected in the first six months of the financial year, and revenue fell by 10.8%. Compounding that, Telstra's fixed line business is incredibly profitable operating margins of 62% in the last half are more than 50% higher than mobile or fixed broadband so it feels that revenue loss very keenly............................... ................................................................................. While that revenue loss is real, and impacts the business and its returns, it masks the growth of the remainder of Telstra's business. For example, Telstra's fixed broadband business grew by 4.4%, while the retail proportion climbed by 9.7% with a growth in customer count and average revenue per user. Mobile was up 4.6%, while its International and Network Applications and Services businesses, while smaller, both grew at over 10%. Impressively, too, Telstra managed to increase margins in all but its Sensis division, as cost cutting continues to deliver bottom-line results. Customer Service Improving If you've dealt with Telstra recently, you might have been pleasantly surprised. In multiple encounters with the telco, I Scott here have been impressed with the improvement in customer service. The knowledge of the operator, friendliness, speed and completeness of my queries or orders have all been very impressive, both in real terms but also a great leap forward compared to previous encounters. I wouldn't yet say Telstra is 'best in breed' when it comes to customer service, but in all of my dealings with service providers of all stripes, it would certainly win the award for 'most improved'. Those improvements have real benefits for both Telstra's top and bottom lines. Happy customers are far more likely to remain with the telco, sign up for additional services and to recommend Telstra to friends and family. Retaining customers is always cheaper than acquiring new ones, so each customer 'saved' is a victory. On top of that, if a customer service issue can be dealt with in a single call, it can translate into real savings for the company. Not only can it have fewer staff on the front line, but rework is minimised. Capex Casts a Shadow Telstra has spent a large amount of money in recent years on capital expenditure the pits, towers and cables that let it shunt our phone calls and internet browsing around the country. That infrastructure spending is likely now past its peak, meaning we should see lower costs in future. While capex doesn't hit the profit and loss statement straight away, those expenses do turn up in future years, and a reduction in spending will see higher reported profits in coming years. Of course, a technology business like Telstra is going to continue to see lumpy capex requirements whenever 5G technology arrives, it'll likely bring new capex requirements, for example so we're not suggesting investment will never be needed again, just that the current numbers likely don't reflect a 'through the cycle' view. Growth Ahead If you're anything like us, your smartphone and tablet have become increasingly central to your work and personal lives (and if you're not like us, rest assured that there is a large and growing number of people who are at least in that sense!). Email, internet browsing, Skype, Facebook (for work, I promise!), maps, sharemarket quotes, weather, foreign exchange rates and yes, games were just some of the smartphone applications I accessed while I was writing this issue of Motley Fool Share Advisor. In the past week alone, I've also watched YouTube clips, downloaded music and listened to podcasts on my trusty iPhone. Our use of mobile data is exploding and Telstra, with its 4G network, stands to benefit most. It has the fastest network and largest coverage of any mobile provider, and in a market where scale matters, only a thoughtless and uncorrected misstep will see it cede that advantage to the other players. Telstra's aggressive move to tie up sporting content and its 'Thanks' program also make the company 'stickier' for customers, while opening up revenue opportunities from other carriers' customers. And while fixed line revenue declines continue to depress revenue, that segment is getting progressively smaller, while mobile, services and its international businesses get larger a transition that should see progressively greater overall revenue gains. The Foolish Bottom Line We've almost made it right through our recommendation without once mentioning Telstra's almost-more-certain-thandeath-or-taxes 28-cent-per-share dividend. It shouldn't be underestimated, though at current prices, that 5.7% return is 8.1% grossed up to include franking credits. It's also likely to be increased at some point in the next year or two. Add in a trailing price/earnings ratio of 15.7 times, which is unfavourably impacted by capital expenditures and the continued explosion of mobile data consumption and a yet uncertain combination of cash and revenue from the NBN, and we think now is a great time to add this quality core telco to your portfolio. shareadvisor.com.au
some background - I bought TLS heavily in the low $3's as part of my expectation of people starting to chase yield after a disappointing period of zero capital gains. I yelled at my dad when he sold for about $3.70 as I thought it would break $4 easily and maybe $5 by the end of this year. That came earlier than I thought and I sold out for $5. I really wanted to keep them for the dividend and should have bought back in when they dropped to $4.50 with the market pullback and asbestos scare but I got distracted and missed my opportunity. My reason for selling despite liking the stock is simply my concern it had got ahead of itself as people just chased yield. I could see it in a lot of the stocks I owned, SPN, SKI, BWP, DUE. All going up heavily, not due to growing earnings but people chasing yield. I did not own any banks but the effect was the same with them also - price up, yield down, risks ignored. From here I think TLS may still go up (interest rates are still falling) but there are downside risks that were just not present in $3-4 range. As you say Finicky, TLS has form for headbutting the $5 mark but not being able to punch through it. The economy is faltering and that may impact earnings in mobile and internet as non-payment of bills increases or people downgrade to cheaper plans although that is not a major concern. My main concern is people start chasing capital gains again instead of yield and TLS falls out of favour (again). That would probably take some time to play out. To be honest, I am 100% sold out of the sharemarket as of May this year so a 20-30% fall in the market would be good for me. I'd buy back in to TLS at anything around the $4 mark and be comfortable with the investment even it if fell further than that. For now, TLS is overpriced for me not on fundamentals but based on the fickleness of the market.
I think that Telstra shares are popular atm because of the dividend return is better than a term deposit currently. Telstra are also a pretty safe bet i.e. unlikely to go bankrupt any time soon.
^^^ Do you read the prior posts in a thread? Quote: Nukz 2012-05-09 "Not many people here have mentioned this before but TLS has got to be one of the best hedges against any fear in markets - you could easily argue better than precious metals in recent times. "... personally i like them because they're sitting on a mountain of cash, they pay a quite nice div, and so far the last 12 month performance has been up 35%." Nukz 2012-05-15 "Once again take a look at TLS, it's working as a hedge against falling markets."
usually but I didnt read the wall of txt in the 2nd post, and what I posted was slightly different to your highlited point I like Telstra but I don't own any I see better value in other shares atm. ( RFG is one )
I have that subscription too Fin, still considering. It goes ex-div very soon, and would expect the usual sell-off afterwards.
Not disputing the share price has gone up and has been a good bet for the past year, but they are certainly not sitting on a mountain of cash They may hold cash but they are geared up to the eyeballs - over 100% debt to equity Their NTA has been falling for the past 10 years because they keep paying out more in dividends than they make in profits I suppose you can run high borrowings when you are the size of Telstra, but if interest rates start rising in the future they will be very exposed to that. TLS was an easy buy a couple of years ago while the future fund was selling down their stake. They were bound to go up again once that selling finished.
Yes, that's my feeling. Already has headwind from the relentless share price rise, then the div goes ex, then it's supposed to break above 11 years of resistance sustainably? Not ruling out temporary break. Intuitively, true break doesn't look all that probable. I'm prepared to miss out anyway if wrong. FY results due next few days? Equable response to my too blunt comment Court Jester Maybe you got the M Fool free recco? Note that Retail Food Group (RFG) was first recommended to MF subscribers in 20-Dec-12, BUY @ $2.97 "The Motley Fool's Top Dividend Stock of 2013-2014 Retail Fool Group (ASX: RFG) should be a name Motley Fool Share Advisor subscribers are already familiar with, given we recommended it as a buy back in December 2012, and have maintained it as a buy recommendation on our scorecard ever since. The stock is up nicely since we first picked it, but obviously we still like it, and its 4.4% fully franked dividend yield." Well just going on the company historicals at Comsec this is dated criticism. It was mostly under Trujillo that that was going on wasn't it? I get divs exceeding eps in FY's 05, 06, 07, and 2011. But in FY2012 eps was 31.5c and div was 28c
Yes it is dated and I'm not forecasting the future will be the same Don't get me wrong they have some good numbers - ROE is over 30% which is fantastic, although that is probably partly due to the high debt level and interest rates going down Effectively though TLS is a no growth company. They are limited to Australia and are already the biggest EPS is the same as it was 10 years ago. Which would be fine if the PE was 8 but it is 16 If it wasn't for the high dividend the share price could be much lower. It will be very interesting if they start to expand beyond Australia. On the one hand it would provide more chance of growth but on the other hand they may have to cut the dividend if they need more capital to grow - or increase borrowings even further I'm often wrong though so don't listen to anything I'm saying I've thought all the banks are fundamentally f**ked for years but their profits and share prices keep going up Soon the entire ASX will consist of just the four banks
Timely article in light of this discussion http://www.smh.com.au/business/cash-is-cactus--but-theres-risk-in-yield-20130807-2rgf4.html added another http://www.smh.com.au/business/telstra-likely-to-hold-dividend-steady-20130807-2rgrz.html
Telstra rings in profits August 08, 2013 09:40 AM Telstra Corporation Limited (ASX:TLS) has posted a big lift in net profit for fiscal 2013 and says it expects to continue to grow revenue and earnings in the year ahead as it builds out its 4G mobile network. In the year to June 30, the telco's net profit was $3.8 billion, a 12 per cent increase on the previous year's result. The net profit figure exceeded analysts' profit expectation of $3.77 billion. In the same period, revenue was $25.7 billion, a 1.2 per cent jump on year. Telstra will pay a fully-franked full-year dividend of 28 cents on September 20. http://www.finnewsnetwork.com.au/ar...il&utm_term=0_ebb2490e1c-0ec79a2021-137602186
Yeah I got on Telstra @ $2.90 back in 2010 and is the largest single holding in my portfolio. People now say what a good buy that was, considering I've also received 14c x 6 fully franked dividends. But at the time remember the NBN outcomes were still unknown and Telstra was dying a slow death from its copper network. The dividend at the price I paid amounts to 9.6% tax paid or about 12.5% gross. There's a reason the dividend yield was so high and that's because it looked unlikely Telstra could maintain its dividend in the face of falling revenues. But today its a different story. 3G & 4G offer Telstra an unrivaled service and the NBN has been sorted out to the tune of $11Billion to shareholders. Would I buy Telstra at $5? Probably not. But I'm not selling at $5 either
Keeping me guessing. Not a savage reaction to the stock going ex dividend. Div is 14c, stock down 15.5c with half an hour to the close, spinning top indecisive candle (although I just notice a bit of deterioration from the uploaded position). I was expecting more reaction frankly as the stock is still strongly overbought on monthly and has recently bumped up against 11 year resistance, as discussed.
From 5.10 that's the full dividend for the year gone out of Telstra's share price now. Full year div FY13 was 28c. It looks like it wants to go down further. I'm thinking a good chance of 4.50 now? $4.50 looks to be the critical level to hold, very confidence shaking if that broke.
^^ finicky - I'd agree that sub $4.50 seems more likely than it did a few weeks ago. Perchance a buying opportunity beckons. I'll certainly be keeping a close eye on it. Toi be honest though I think you need to push that graph out further - the $4.50 reached in April was simply a temporary plateau after a strong run up - not sure it really is a critical level.
If it comes back to 4.50, which I put at a strong chance, I'll buy a third probably. If 4.50 breaks, which I couldn't rate yet, I'll be waiting for an opportunity at 4.00 or 3.75. I think TLS 4.00 or 3.75 is possible, not saying it's likely unless a break of strong support level of 4.50 History: 4.50 looks like mid point or 'point of control' of price ranges in 02, 03, 04 and 07, 08. Then price had strong bounce off 4.50 this year
