Is the Telstra Corporation Ltd (ASX: TLS) share price a buy? The telco could be one of the most defensive shares within the ASX 20.

We’ve already seen during this period how uncertain shares like Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group (ASX: ANZ) can be at a time like the coronavirus.

I don’t know about you, but the internet has been one of the main things that has helped during this coronavirus period. Whether that’s communication, entertainment, work – Telstra (and other telcos) help deliver that imperative service.

The Telstra share price has been rightly falling over the past five years. The NBN has cut into profit margins and there has been strong price competition on 4G mobile.

5G could change everything for the Telstra share price

A new technology has the potential to change everything. New technology offers growth potential we don’t even know of yet. We couldn’t have imagined how many new services would have become mainstream in the world thanks to 4G. Various Alphabet (Google) offerings, Facebook, ridesharing, food delivery and so on. Telstra’s share price and earnings hasn’t captured much of this value.

What’s going to happen with 5G? Well technology like automated cars and virtual reality or augmented reality are already planned services. That alone will be a huge change for life.

But we don’t yet know what the economics of what 5G will be. How much will customers have to pay each month? Will we have to pay monthly for things like our car?

How the pricing is structured is important. What’s to stop 5G just turning into a price competition like 4G has? That would be bad for the Telstra share price.

At the moment Telstra is in a good position. It’s probably going to be (one of) the first to bring 5G to the national Australian market. The delayed merger between TPG Telecom Ltd (ASX: TPM) and Vodafone Australia may help Telstra. First, there may be less price competition (and higher margins). Second the initial block by the ACCC has meant that TPG and Vodafone are behind Telstra in the 5G construction timetable.

Foolish takeaway

Is the Telstra share price a buy? Well the telco is investing heavily for 5G which is good. But FY20 may not show any profit growth despite all of the useful cost savings it has been implementing. It’s trading at 18x FY21’s estimated earnings. I want to wait until seeing how 5G will help Telstra before buying. I think I’d rather buy TPG today. There are plenty of other shares I’d rather buy in the ASX 200 too.

More reading

• Top brokers pick the latest ASX shares to buy today
• Where will the Telstra share price be next year?
• Top brokers name 3 ASX shares to buy right now
• 3 easy rules for building a massive ASX share portfolio
• Tax planning for ASX 200 investors

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. 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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ASX 200 dividend share Orora Ltd (ASX: ORA) is paying a 50% franked dividend of $0.373 per share. At Thursday’s closing price, this equates to a dividend yield of 14.3%. The company goes ex-dividend on 19 June. This means that as long as you buy before that date, you get the dividend.

Moreover, the company has announced an additional return of capital from a recent asset sale. This raises the overall payment to 18.8% at time of writing for this dividend share. 

Orora’s share price has a history of rising prior to the ex-dividend date. The higher the share price you buy in at, the lower the dividend yield, so it would be wise to act very quickly to secure a high yield.

Dividend history

Over a 6-year period, Orora has grown its dividend payment by an average of 13.8% every year. The company also shows all the signs of being well managed. It grows its earnings per share every year, and its share price has also grown by an average of 14% per year over a 6-year period.

Company overview

Orora operates a beverage and packaging business in Australia and the United States. It produces bottles, boxes, cartons and aluminium cans, and general packing products. In October 2019 it sold its Australasian fibre business to Japan’s Nippon for $1.7 billion. This provided the company with a $1.2 billion windfall, half of which it will be returning to shareholders alongside the dividend payment. 

At the time of writing, Orora is selling at a price-to-earnings ratio (P/E) of 22.22. This is below the company’s 10-year average. So while it is high, the market has factored in growth given the company’s management history. The Orora share price is still down by 16%, year to date.

Foolish takeaway

I believe this dividend share is a rare income and value investing opportunity. Orora is a good company at a good price with an 18% definite payment within less than a month. The scope for future share price growth is very high over the medium term, and the company will likely continue to pay reasonable dividends based on its history. However, for taxation purposes only 50% of the initial dividend payment is franked.

More reading

• Why Dicker Data, Medibank, Mesoblast, & Orora are dropping lower
• Why Inghams, Orora, Redbubble, & ResMed shares are dropping lower
• Top broker lists 15 ASX shares with safer dividends than Westpac

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Buy this ASX 200 dividend share now for an 18% return in a month appeared first on Motley Fool Australia.

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