With the $857 million acquisition of PacNet still fresh in investors' minds, shareholders in blue-chip income stock Telstra Corporation Ltd (ASX: TLS) have another reason to smile today.
At the close of trade on Wednesday, Telstra was bucking the downward trend which has sent the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) close to 1% lower, with the giant telco registering a gain of 1% and a new 13-and-a-half-year closing high of $6.17.
While Top-20 stocks such as Santos Ltd (ASX: STO) have been suffering massive share price falls and others such as Woodside Petroleum Limited (ASX: WPL) are being touted as potential candidates for forced dividend cuts, Telstra is going from strength to strength.
The PacNet acquisition is a significant offshore move and growth opportunity for the group which provides Telstra with data centres throughout Asia, including China, as well as a 46,000km undersea cable network.
What's more, unlike the question marks which are starting to appear around the dividend pay-out levels of other blue-chip stocks, Telstra's fully franked dividend appears rock-solid with analyst consensus forecasting a rise to 30 cents per share (cps) this financial year (FY) and a jump to 35.5 cps in FY 2017.
Copper joins the fray
Adding to the uncertain outlook for widely owned blue-chip stocks was the dramatic fall in the copper price overnight. The unexpected drop which occurred after a downbeat assessment for global growth was released by the World Bank is bad news for shareholders in BHP Billiton Limited (ASX: BHP), which is a major producer of the metal. The mining giant's share price finished Wednesday's session down 2.7%.
All this volatility and uncertainty is playing to the advantage of a safe haven stock such as Telstra, with investors appearing to be keen on increasing their positions in this defensive business. Demand for the stock's yield and certainty, coupled with earnings growth potential has even led leading market commentator Charlie Aitken to upgrade his price target for the telco to $7 a share.
