The Telstra Corporation Ltd (ASX: TLS) share price is hovering almost 15% below its 52-week high of $5.86 in July. It's been mostly downhill for the shares since then, although they have rebounded since November.
Telstra shares are a foundational holding in many investors' portfolios. Not only is it one of Australia's biggest companies, with a market capitalisation of $59 billion, it's also one of the country's most generous and reliable dividend payers.
That said, it's also important to not be overly exposed to the shares. Telstra, as well as Woolworths Limited (ASX: WOW), BHP Billiton Limited (ASX: BHP) and several other blue chip shares have demonstrated that even they are not immune to sharp falls in their share prices. This leaves those investors who have a large portion of their wealth tied up in them vulnerable.
At less than $5 a share, Telstra could be a good stock to hold in 2017, so long as it is held next to a number of other quality businesses in a diversified portfolio.
Cautions aside, here are three reasons to consider owning Telstra shares:
- A generous dividend. Telstra shareholders have received a total of 31 cents in fully franked dividend shares over the last 12 months. At today's share price, that puts them on a fully franked yield of 6.2% — or 8.9% grossed up.
- Strong supporter base. As one of Australia's biggest companies, Telstra is widely covered by analysts and journalists. That makes the business easier to keep tabs on, while it should also help to reduce some volatility in its share price.
- Quality product. Despite some hiccups during the year, Telstra still offers a service that is widely considered to be one of high-quality. Many consumers remain willing to pay a premium for the service, rather than rely on those offered by Telstra's rivals.
Foolish Takeaway
As is the case with any share, you should never be overly exposed to any one stock. But if you are seeking a high-quality business that pays a solid dividend then Telstra is well worth your attention.
