Earlier today shares of Telstra Corporation Ltd (ASX: TLS) traded for less than $6.
Down from a high of $6.67 per share in February, shares of Australia's largest telecommunications company have retreated around 7% over the past three months. The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) meanwhile is down just 2.1%.
The fall of Telstra – a renowned dividend stock – has been mirrored by fellow ASX-listed stocks favoured by income and SMSF investors such as Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC).
Has the 'Search for Yield' ended?
Australian investors' Search for Yield hit a road block last week. Not only did the Reserve Bank of Australia (RBA) drop its easing bias when it cut interest rates to 2%, the big four banks reported a terrible set of half-yearly and quarterly results.
Whilst Telstra didn't report anything meaningful to the market, it may simply be getting caught up in the general malaise spreading throughout the overpriced blue-chip dividend stock community.
Are Telstra shares now cheap?
I'm on record as saying I wouldn't buy Telstra shares for more than $5. Indeed, despite falling more than 4% in the past month it is paramount investors focus on the underlying cash generating ability of the company to determine fair value, not movements in the share price. Whilst I think investors could do a lot worse than buy Telstra shares today (after all, it's a great investment for income), it's important to remind ourselves: patience doesn't lose you money.
Why not wait until Telstra drops back into a more compelling valuation range?
And if it doesn't? I hear you ask…
