Welcome to this ASX World Cup semi-final game between Australia and New Zealand Banking Group (ASX: ANZ) and Telstra Corporation Ltd (ASX: TLS). Two giants of the ASX with strong support from adoring fans regularly celebrating juicy fully franked dividend payments.
Pre-match commentary and stats
Both these teams are looking to Asia for growth, ANZ with its Super Regional strategy and Telstra with its two-pronged plan to expand its technology and mobile services into Asia. Why Asia? The middle-class in Asia is projected to expand exponentially into the future and both companies offer products this huge new Pan-Asian middle-class will want to use.
| ANZ Bank | Telstra | |
| Code | ASX:ANZ | ASX:TLS |
| Recent Price | $33.54 | $5.37 |
| Market Capitalisation | $91.90 billion | $66.32 billion |
| Dividend Yield / Franking | 5.1% | 100% | 5.4% |100% |
| Projected P/E ratio 2015 | 12.5 | 15.7 |
| Price-Book ratio | 2.05 | 5.26 |
Source: Morningstar / Thomson Consensus Estimates.
Telstra has a strong team with a game-changing striker in the huge amounts of free cash flow it generates, recently swollen further by the $2 billion sale of its Hong Kong mobile phones business CSL. How to spend this cash seems the short-term challenge for the Telstra team, shoot with investment for the future, or reward the loyal fans with an increased dividend or share buyback? Any potential share buyback and consequent earnings per share boost would be music to the ears of Telstra's loyal base of retail shareholders and this potential sees them score one of the goals of the tournament! 1-0 to Telstra.
The ANZ team is another strong player and captain Mike Smith appears keen to make the Asia region the centerpiece of his growth strategy. Indeed, a recent ANZ report claimed that with continued progress in financial reform the Asian financial system is on target to be bigger than the U.S. and Europe combined by 2030! No wonder the bank's aiming to play more of the game in Asia in the future and with a growing physical presence all over the continent, Mike Smith's plan scores a fine diving header to level the scores at 1-1.
Both teams are searching for a winner going into the second half and Telstra finds it with the switch to wireless communications and potential of its Network Applications and Services (technology focused) division to grow into the future. Telstra continues to add mobile customers on the back of the best network in Australia, with the Network Application and Services business also scoring record revenue growth, this means Telstra scores a winner based on value and overall outlook. 2-1 to Telstra and it's into the World Cup Final!
If you love your fully franked dividends these two are good options, but there may be a junior player getting ready to be the star of the next World Cup below!
