If you are lucky enough to have $10,000 burning a hole in your pocket, you might want to consider putting it to work in the share market.
After all, with the share market providing investors with a 10% per annum return over the long term, it could turn that money into something much larger in the future if you have no immediate use for it.
With that in mind, let’s now see if Telstra Group Ltd (ASX: TLS) shares would be a good option for those funds.
Are Telstra shares a good option?
It is fair to say that the telco giant has not been a great place to invest over the last 12 months.
Over this time, the company’s shares have lost 16% of their value. This compares to a 6.3% gain by the ASX 200 index.
Though, it is worth noting that this decline has little to do with Telstra’s performance and more to do with interest rates. As Telstra’s shares are treated like a bond proxy by many investors, demand falls when rates rise.
But that was then. What about now? Could an investment in Telstra shares deliver strong returns over the next 12 months? Let’s find out.
What could $10,000 become?
Firstly, if you were to invest $10,000 (and $1 more) in the telco giant, you would end up owning 2,740 shares at the current share price of $3.65.
According to a recent note out of Goldman Sachs, its analysts believe the company’s shares are undervalued at the current share price. That note reveals that the broker has put a buy rating and $4.55 price target on the company’s shares.
This means that if your 2,740 Telstra shares rose to that level, they would be worth $12,467. This is almost $2,500 or 25% greater than your original investment.
But the returns shouldn’t stop there. Telstra is historically one of the more generous dividend payers on the Australian share market and Goldman expects this to remain the case in the future.
The broker is forecasting a fully franked dividend of 18 cents in FY 2024. This represents a 4.9% dividend yield and will boost the value of your investment by $490 if you reinvest the income.
In total, this would mean that a $10,000 investment in Telstra shares becomes worth $12,957. That represents a total 12-month return of almost $3,000 or 30%, which is approximately triple the average market annual return.
The post How much could $10,000 invested in Telstra shares be worth next year? appeared first on The Motley Fool Australia.
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More reading
- Inherited a substantial sum of money? Here’s how I’d spend it (including the ASX stocks I’d buy)
- Buy Telstra and these ASX dividend stocks for income
- How to help recession-proof your ASX share portfolio in May 2024
- 3 easy ways to reduce your ASX share portfolio’s volatility right now
- How to choose ASX shares for passive income
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 positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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