Tag: Motley Fool Australia

The Telstra Corporation Ltd (ASX: TLS) share price is weathering the COVID-19 market meltdown better than most, but the calm could be marred by another mobile plan price war.

The risks of a price war are growing now that the merger between TPG Telecom Ltd (ASX: TPM) and Vodaphone is largely fait accompli.

A return of the bruising battle between mobile operators in late 2018 will almost certainly see the Telstra share price suffer after a period of relative outperformance.

While the stock is down by around 13% since the start of the year, the S&P/ASX 200 Index (Index:^AXJO) is lagging with a 17% decline due to the pandemic.

Smaller battle

The good news is that any new mobile war is unlikely to be as value destroying as the last one, according to UBS.

The broker is witnessing increasingly evidence of mobile discounting returning but believes the discounts will be more tactical this time round as opposed to outright price cuts on plans.

The tactical discounts are those that apply when customers bundle services or when existing customers add new services.

Itching for a fight

But Vodafone may be more motivated to win greater market share due to its greater exposure to international students. The number of these students have plummeted since the global coronavirus lockdown.

This means the number three network is likely to post falling subscriber numbers while Telstra gains subs.

Vodafone may also be forced to be more aggressive due to pressure from Telstra’s flanker brands. These brands sell lower cost plans under Belong and JB Hi-Fi Limited (ASX: JBH).  

UBS pointed out that the flanker brands are pressuring the average revenue per user (ARPU) across the industry by more than the market realises.

Further, Vodafone is likely to feel the heat to act as its ability to grow ARPU through 5G is more limited than Telstra.

Showing restrain

“We flag that whilst the benign industry status quo suits TLS best with its c50% share, the #3 player Vodafone may be less content with its existing c20% share. We therefore expect discounting to return incrementally,” said UBS.

“With industry post-tax ROICs [return on invested capital] (ex NBN migration payments) now only c4% vs c10% at FY16, MNOs [mobile network operators] simply cannot afford another downward repricing of their customer books.”

Who would have thought we can count on skinner returns and the cash crunch from the COVID-19 fallout to protect Telstra shareholders!

Foolish takeaway

But this doesn’t mean Telstra is out of the woods. UBS believes consensus earnings forecasts for our largest telco may be too optimistic as the market doesn’t seem to be pricing in any real competition.

On the other hand, I think as long as Telstra can cover its dividend payouts, investors will be willing to tolerate a hungrier competitor.

The fact is, the number of reliable and high dividend paying ASX stocks are in short supply.

More reading

• Brokers name 3 ASX 200 shares to buy right now
• ASX 200 down 0.2%: Wesfarmers overhauls Target, Sydney Airport has no plans to raise equity
• 3 reasons the Telstra dividend is sustainable for the foreseeable future
• Can you still invest like Warren Buffett in 2020?
• Why is the Telstra share price being left behind?

Motley Fool contributor Brendon Lau owns shares of Telstra Limited and TPG Telecom Limited. 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.

The post Is Telstra about to be caught in a new mobile phone war? appeared first on Motley Fool Australia.

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If you’re planning to invest into the Australian share market, then one of the shares listed below could be worth considering whether you’re looking for growth, income, or value.

Here’s why I think these shares are in the buy zone:

Aristocrat Leisure Limited (ASX: ALL)

This gaming technology company could be a good option for value investors. The earnings of its core poker machine business have been hit hard by the pandemic and are likely to remain subdued until casinos reopen again. But once things return to normal, I expect Aristocrat’s group earnings to accelerate materially. Especially given the impressive growth being exhibited by its digital segment. Based on this, I estimate that its shares are changing hands at just 18x FY 2021 earnings. Given its positive long term outlook, I think this is a real gift for investors.

Pushpay Holdings Group Ltd (ASX: PPH)

Growth investors might want to consider an investment in this donor management platform provider. Pushpay is rapidly bringing the church market into the modern age with its increasingly popular platform. The company has just recorded exceptionally strong operating profit growth in FY 2020 and is guiding to further strong growth in FY 2021. Looking beyond this, management believes it has a massive market opportunity. And thanks to the quality of its platform, I expect it to capture a big slice of it.

Sydney Airport Holdings Pty Ltd (ASX: SYD)

If you’re an income investor and can afford to be patient, then this airport operator could be a good option. The pandemic has impacted the travel and tourism markets materially in 2020, but they will recover in time. I suspect that domestic travel will recover reasonably quickly, with international travel taking another 12 months after that to recover. In light of this, I estimate that Sydney Airport will pay a 27 cents per share dividend in FY 2021 and then a 37 cents per share dividend in FY 2022. This implies yields of 4.7% and 6.5%, respectively, over the two years. I think this makes it a good option for patient investors.

More reading

• Brokers name 3 ASX 200 shares to buy right now
• Why Aristocrat Leisure, Afterpay, Corporate Travel, and Sydney Airport are pushing higher
• ASX 200 down 0.2%: Wesfarmers overhauls Target, Sydney Airport has no plans to raise equity
• 5 things to watch on the ASX 200 on Friday
• ASX 200 drops 0.4%, Chinese threat to Australian iron

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended PUSHPAY FPO NZX. 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 Where growth, income, and value investors can invest right now appeared first on Motley Fool Australia.

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I’m a big fan of growth shares, so feel quite fortunate to have a large number of quality options to choose from on the Australian share market.

And while the coronavirus crisis could stifle their growth in the immediate term, I believe many of them will bounce back strongly in FY 2021.

Three growth shares that I believe could provide market-beating returns for investors over the next decade are listed below. Here’s why I think growth investors ought to consider buying them:

Altium Limited (ASX: ALU)

Altium is an electronic design software company which I believe has the potential to generate strong returns for investors over the next decade. This is thanks to the company’s award-winning Altium Designer platform, which is exposed to the rapidly growing Internet of Things market. Altium is aiming for market leadership by 2025 with 100,000 Altium Designer subscribers. It expects this to lead to US$500 million revenue, up from its forecast for almost US$200 million in FY 2020.

Bubs Australia Ltd (ASX: BUB)

Another growth share which could be destined for big things is Bubs. It is an infant formula and baby food company which has been growing at a very strong rate over the last few years. And thanks to some recent supply agreements with major supermarkets, it looks well-placed to continue this positive form. Especially given the growing demand for ANZ-manufactured infant formula in the lucrative China market.

Xero Limited (ASX: XRO)

Another growth share to consider buying is cloud-based business and accounting software provider, Xero. Although the pandemic is likely to weigh on its subscriber growth in the immediate term, I believe its long term outlook remains very positive. Especially given how the company estimates that less than 20% of the global English-speaking SME market is using cloud-based accounting software. I believe this provides it with a significant runway for growth over the next decade. 

More reading

• 3 mid cap ASX growth shares to buy for monster returns
• 3 shares I’d buy if the coronavirus selloff gets worse
• How to become a millionaire with a $5,000 investment in ASX 200 shares each year
• Why I’d invest $1,000 in this ASX tech share today
• 3 five-star ASX 200 shares to buy right now

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 BUBS AUST FPO and Xero. The Motley Fool Australia owns shares of Altium. The Motley Fool Australia has recommended BUBS AUST FPO. 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 3 top ASX growth shares that could smash the market in the 2020s appeared first on Motley Fool Australia.

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In early afternoon trade the S&P/ASX 200 Index (ASX: XJO) is on course to end the week on a disappointing note. The benchmark index is currently down 0.5% to 5,522.9 points.

Four shares that have not let that hold them back are listed below. Here’s why they are pushing higher:

The Aristocrat Leisure Limited (ASX: ALL) share price is up 2% to $26.60. The catalyst for this gain appears to be a broker note out of Citi this morning. Although the gaming technology company fell short of its expectations in the first half, it remains positive on its future prospects. So much so, it has retained its buy rating and lifted the price target on its shares to $30.10.

The Afterpay Ltd (ASX: APT) share price is up almost 2% to $44.75. Investors have been buying this payments company’s shares this week after it revealed very strong customer growth in the United States. According to its update, two years after launching in the country, it has 5 million active U.S. customers on its platform. Impressively, 1 million of these customers were added in the last 10 weeks during the pandemic.

The Corporate Travel Management Ltd (ASX: CTD) share price is up 5.5% to $11.69. Investors have been buying a number of travel booking shares on Friday despite there being no news out of them. Investors may be hopeful that the potential development of a successful vaccine could unlock global borders and accelerate the recovery of international tourism.

The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price is up 1.5% to $5.67. This follows the release of its virtual annual general meeting presentation this morning. That presentation revealed that the airport operator has no plans to raise equity in the near future. The company also confirmed there will be no interim distribution in FY 2020. Looking ahead, it will be waiting for clarity on the path to recovery before confirming future distribution plans.

More reading

• ASX 200 down 0.2%: Wesfarmers overhauls Target, Sydney Airport has no plans to raise equity
• Why Afterpay and these ASX shares just hit multi-year highs
• 5 things to watch on the ASX 200 on Friday
• ASX 200 drops 0.4%, Chinese threat to Australian iron
• 2 ASX 200 dividend shares to buy for income in 2021

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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 Why Aristocrat Leisure, Afterpay, Corporate Travel, and Sydney Airport are pushing higher appeared first on Motley Fool Australia.

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With many savings accounts offering interest rates of just 1% per annum, if I had $10,000 in an account I would consider putting it to work in the share market.

After all, if you invest wisely, you could generate a return ten times that with shares.

But where should you invest $10,000 right now? Two top shares to consider are listed below:

Bigtincan Holdings Ltd (ASX: BTH)

I think Bigtincan could be a good option for investors. It is a provider of enterprise mobility software. The key product in its portfolio is the Bigtincan Hub. It increases the success of sales and service teams by helping them improve training, meeting preparation, customer engagement, and collaboration with peers. This results in short sales cycles, higher win rates, increased customer satisfaction and loyalty, and, most importantly, improved business results.

The company has been growing at a very strong rate and appears well-positioned to continue this trend for the foreseeable future. Especially after its recent $40 million capital raising. The proceeds will be used to accelerate key strategic priorities, take advantage of market tailwinds, and for potential acquisitions.

SEEK Limited (ASX: SEK)

Another option for a $10,000 investment could be this job listings company. Times are certainly hard for SEEK right now because of the pandemic. Last month the company released a trading update which revealed that listing volumes were down materially. This led to SEEK’s billings for the ANZ and Asia market for the week ended March 29 falling 60% on the prior corresponding period.

And while its listing volumes are likely to remain subdued until the crisis passes, I’m confident they will recover strongly in 2021. Combined with its rapidly growing China business, this should put the company back on a path to achieving its aspirational revenue target later this decade. SEEK has been targeting revenue of $5 billion by 2025, up from $1,537.3 million in FY 2019. I suspect the pandemic may mean it has to push back this target by a year or two, but I believe it will get there. This could make it a great option for patient long term investors.

More reading

• How to become a millionaire with a $5,000 investment in ASX 200 shares each year
• Why Aristocrat Leisure, Bigtincan, Clover, & Megaport shares are dropping lower
• How you can get very rich with ASX 200 shares
• The newspaper killers: 3 ASX 200 online classifieds shares dominating the market
• Where to invest $10,000 into ASX shares

Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia owns shares of and has recommended BIGTINCAN FPO. The Motley Fool Australia has recommended SEEK 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.

The post Got $10,000 to invest? I would buy these ASX shares right now appeared first on Motley Fool Australia.

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At lunch on Friday the S&P/ASX 200 Index (ASX: XJO) is on course to end the week in the red. The benchmark index is currently down 0.2% to 5,538.9 points.

Here’s what has been happening:

Wesfarmers Target update.

The Wesfarmers Ltd (ASX: WES) share price is edging higher on Friday after providing an update on its Target business. The conglomerate is planning to convert some stores in Kmart stores and close down a large number of other underperforming stores. It will then look into other options for the remaining Target stores. These actions will hit the company’s profits through both non-cash and cash charges.

Sydney Airport AGM update.

The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price is pushing higher on Friday after revealing that it has no plans to raise equity in the near future. The company also confirmed there will be no interim distribution. It will be waiting for clarity on the path to recovery before confirming future distribution plans.

Travel shares rise.

One area of the market that is booming on Friday is the travel and tourism sector. The likes of Corporate Travel Management Ltd (ASX: CTD) and Flight Centre Travel Group Ltd (ASX: FLT) are all pushing notably higher at lunch. Investors appear hopeful that the potential development of a successful vaccine could unlock global borders and accelerate the recovery of international tourism.

Best and worst ASX 200 performers.

The best performer on the ASX 200 today has been the Corporate Travel Management share price with a gain of almost 8%. A good number of travel shares are storming higher today. The worst performer on the index is the Unibail-Rodamco-Westfield (ASX: URW) share price with a decline of almost 6%. The shopping centre operator’s shares have continued their downward trend and fallen to a new record low today. Investors have been selling its shares due to concerns over the negative impact of the pandemic on its centres.

More reading

• Why Aristocrat Leisure, Afterpay, Corporate Travel, and Sydney Airport are pushing higher
• Can you still invest like Warren Buffett in 2020?
• Wesfarmers share price lower after announcing major Target overhaul
• Why is the Telstra share price being left behind?
• Are ASX 200 REIT shares a dividend trap?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended Flight Centre Travel Group 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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The MoneyMe Ltd (ASX: MME) share price has raced out of the gates to be up by as much as 18.63% in early trade. This morning, the company provided a market update on its business operations and also announced the forthcoming launch of a new product offering.

MoneyMe is still relatively new to the ASX after publicly listing in December last year at an initial public offering price of $1.25. The company is a digital consumer credit business, leveraging its Horizon Technology Platform and big data analytics to deliver an innovative loan offering to online-ready consumers.

May 2020 business update

This morning, MoneyMe revealed that its diversified customer base and target orientation growth strategy continues to minimise COVID-19 credit risk. As a result, the company has seen a continuing downward trend of payment requests due to the pandemic.

The majority of customers who previously sought hardship relief have resumed making repayments, with only 1.7% of receivables having payments deferred.

MoneyMe also remains confident in establishing a new funding facility. If secured, the facility will help to support asset growth and lower funding costs. However, timing is a slight sticking point. The execution of a new facility is likely to be delayed to the first quarter of FY21 due to circumstances relating to COVID-19.

In the meantime, the company has secured a further 18 months of continued access to its existing trust funding facilities to provide funding certainty through to November 2021. MoneyMe notes that its existing facilities and cash on hand leave the company well-placed for origination funding and growth opportunities.

New product launch

Along with the business update, MoneyMe also announced that a new product offering, RentReady, will be officially launched in June. RentReady is a first-to-market product designed to support landlords with capital spend requirements and any short-term rent or operational requirements.

The product features a line of credit of up to $15,000 administered by property managers for landlords, with repayment over a period of 24 months. The credit can be used by landlords for a number of different options, including general service, maintenance, and improvement spend, as well as to cover shorter-term rent shortfalls – a timely option in the current environment.

MoneyMe highlighted the highly complementary nature of RentReady to another of its key offerings, ListReady, which assists residential property vendors with the costs of marketing their home for sale. ListReady has more than 240 agencies and 1,500 agents signed up to support vendor sales.

At the time of writing, the MoneyMe share price is currently sitting 10.45% higher for the day at $1.22, reducing its year-to-date fall to 15.86%.

More reading

• ASX small-cap sector rallies strongly during April

Motley Fool contributor Cathryn Goh 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.

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If I were buying ASX blue chips today I’d want to buy ones that have long-term growth potential.

Shares have the potential to create really nice returns over the years if you invest in the right shares.

Some ASX blue chips may actually face poor returns over the coming years. For example, I’m not confident about the growth potential of banks such as Australia and New Zealand Banking Group (ASX: ANZ). From this share price I’m not sure that BHP Group Ltd (ASX: BHP) would be a good choice either.

But there are some blue chips I wouldn’t mind buying today within the ASX 50:

APA Group (ASX: APA)

APA is one of the biggest infrastructure businesses on the ASX, it’s my preferred pick for both infrastructure and energy exposure.

It owns a vast network of 15,000km of natural gas pipelines around Australia with a presence in every mainland state and the Northern Territory. It also owns or has interests in gas storage facilities, gas-fired power stations and renewable energy generation (wind and solar farms). APA owns, or manages and operates, a portfolio of assets worth more than $21 billion and delivers half the nation’s natural gas usage.

It’s one of the few businesses within the ASX 50 that should be relatively unaffected by the coronavirus impacts during this period. Reliability is valuable over the next 12 months. I think it’s a really good ASX blue chip.

Over the longer-term the business continues to look for investment opportunities both here and also in the US.

Macquarie Group Ltd (ASX: MQG)

Macquarie is one of my favourite financial businesses on the ASX. The global investment bank is one of the biggest asset managers in the world, which generates attractive fees. This division will be important during the coronavirus.

One of the main reasons why I’m attracted to Macquarie is its quality and price. Over the past decade it has grown wonderfully and invested into a number of different attractive areas. It has high quality management and having the ability to grow anywhere in the world is a great feature. Over the long-term I think it will be one of the best ASX 20 blue chips.

The Macquarie share price is currently down 31% from 21 February 2020. But don’t forget that interest rates are now incredibly low and there’s a lot of global central bank support.

Amcor Plc (ASX: AMC)

Amcor is one of the few businesses to upgrade its profit guidance for FY20. It’s now expecting adjusted earnings per share (EPS) growth in constant currency terms of 11% to 12%.

The global packaging business’ merger with Bemis is going well with year to date benefits of $55 million.

In the nine months to 31 March 2020 Amcor generated ‘generated’ free cash flow of $367 million, which was up by $217 million. Amcor is repurchasing shares and its dividend remains solid. It’s a great ASX blue chip for this situation.

Foolish takeaway

Each of these ASX blue chips have promising long-term futures. At the current prices I think Amcor would probably be the best pick, but I really like APA for its defensive distribution.

More reading

• How to invest $1,000 in ASX 200 shares like Warren Buffett today
• Is the Macquarie share price a buy?
• Is it time to buy ASX banks?
• Macquarie picks the best stocks to buy for the post COVID-19 rebound
• 3 Warren Buffett ASX dividend shares to buy right now

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Amcor Limited and Macquarie Group Limited. The Motley Fool Australia owns shares of APA Group. 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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It has been a volatile day of trade for the S&P/ASX 200 Index (ASX: XJO) on Friday. At the time of writing the benchmark index is trading a fraction lower at 5,545.2 points.

Four shares that have fallen more than most today are listed below. Here’s why they are dropping lower:

The Downer EDI Limited (ASX: DOW) share price is down 2.5% to $4.23. This morning Downer EDI revealed that its Spotless business has settled a class action that was commenced against it in the Federal Court. The company advised that the settlement is without admission of liability and remains subject to Federal Court approval. If approved, the pre-tax impact on Downer EDI’s results for FY 2020 will be $35 million.

The InvoCare Limited (ASX: IVC) share price has dropped almost 2.5% to $11.02. Earlier this week the funerals company issued the shares from its $74 million share purchase plan. These funds were raised at a discount of $10.40 per share. This could mean that some shareholders have decided to take a bit of profit off the table today.

The NRW Holdings Limited (ASX: NWH) share price has fallen 4% to $2.10. This decline appears to be down to profit taking after the infrastructure contractor’s shares rocketed significantly higher on Thursday. Investors were buying the company’s shares after it revealed unaudited revenue of $1.6 billion for the 10 months to April 30. This is greater than any revenue it has achieved during a full 12 months. 

The Whitehaven Coal Ltd (ASX: WHC) share price has come under pressure and is down 3% to $1.69. Investors have been selling the coal miner’s shares on Friday amid concerns that it could get caught up in an Australia-China trade spat. This follows reports that some Chinese power plant operators have been instructed to not buy Australian coal.

More reading

• Has China banned Australian coal?
• ASX 200 down 0.2%: Afterpay hits a record high, Aristocrat Leisure update disappoints
• ASX 200 mining services share storms 27% higher on record revenue result
• Why Afterpay, AMA, NRW, & Santos shares are racing higher
• Why this ASX funeral share is well positioned for future growth

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended InvoCare 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.

The post Why Downer, InvoCare, NRW Holdings, and Whitehaven Coal are dropping lower appeared first on Motley Fool Australia.

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One thing that divides opinion among investors right now is the sustainability of the Telstra Corporation Ltd (ASX: TLS) dividend.

I believe the 16 cents per share dividend is sustainable from its current cash flows, but some believe another cut is coming with its full year results in August.

And while Telstra could decide to be conservative with its capital because of the pandemic and cut it down to 14 cents per share, I’m optimistic that this won’t be necessary.

One broker that believes Telstra’s dividend cuts are over is Goldman Sachs. This morning it revealed a few reasons why it is forecasting a 16 cents per share dividend through to FY 2023.

Why is Goldman Sachs positive on Telstra?

Goldman Sachs has downgraded its earnings estimates for the next few years. This is to reflect the timing of the NBN rollout, mobile average revenue per user declines (in respect to lower mobile roaming revenues), and higher bad debt charges and labour costs.

However, it doesn’t believe this will be enough to force a dividend cut for three reasons.

Goldman commented: “In an NBN world, with capex/sales of c.12%, we estimate TLS will generate 24¢ps of cash in FY23E, comfortably funding a 16¢ dividend (66% payout vs. 70-90% EPS target).”

The broker also expects its earnings to be strong enough in FY 2022 to support the dividend. “Our FY22E underlying EBITDA of $7.9bn is above TLS targeted $7.5bn to maintain its 16¢ dividend,” it added.

And in the near term, it believes “it is unlikely TLS would have accelerated $500mn in capital spend in CY20, should this have impacted its ability to fund the dividend.”

Goldman Sachs stress tested its dividend assumptions under three bear case scenarios. These include the permanent loss of roaming revenue, fixed margins of 0% in FY 2022 and FY 2023, and the halving of data and IP earnings from the NBN impact.

In each of the scenarios, the broker found that Telstra would have “an adequate buffer to maintain its 16¢ dividend.”

In light of this and with its shares trading at a significant yield spread to the Australian bond rate, the broker has held firm with its conviction buy rating and given its shares a $4.05 price target.

I agree with Goldman Sachs on Telstra and feel it would be a great option for income and value investors right now.

More reading

• Why is the Telstra share price being left behind?
• 5 things to watch on the ASX 200 on Friday
• 3 strong ASX dividend shares with fully franked yields
• TPG Telecom shares jump on demerger and special dividend plans: Should you invest?
• 3 safe and strong ASX dividend shares to buy right now

Motley Fool contributor James Mickleboro 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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