Look out below!
Telstra Corporation Ltd (ASX: TLS) shares are falling yet again…
Telstra's share price versus S&P/ASX200 (ASX: XJO) (index:^AXJO); source: Yahoo! Finance.
However, if there is one positive to come from Telstra's plunging share price, it's the telco's huge dividend yield.
Indeed, the faster Telstra's share price falls, the faster its dividend yield rises!
Based on last year's payout, Telstra shares currently change hands at a dividend yield of 5.46% fully franked.
Adjusted for the tax-effective franking credits, Telstra's comparable dividend yield blows out to an enormous 7.8%!
Try getting that from the bank.
And Telstra isn't like some other ASX blue-chip stocks that pay dividends as their debt levels pile high.
Telstra's dominating presence in fixed products like broadband and mobiles enables it to generate exceptional profits and cash flow.
Also, Telstra's cash coffers are set to get an injection from the government's NBN Co for the sale of its 100-year-old copper cable network.
The money will be invested in local projects, like the nationwide WiFi rollout, and abroad. In fact, Telstra has set an ambitious goal of generating one-third of revenues from Asia by 2020.
However, dividend increases haven't been ruled out.
I've said it before, but the closer Telstra's share price gets to $5, the more compelling its valuation becomes. But until then, I think it's best left on your watchlist.
