It's been a rough time for Telstra Corporation Ltd (ASX: TLS) shareholders lately, what with the plunge in their shares and the deluge of negative news flow.
I'm not overly keen on the company myself. However, I think there are a few good reasons the share price might have reached its nadir already:
- The dividend
Whether it gets cut or not, Telstra will likely still pay a market-beating dividend. The lower the share price falls, the more valuable the dividend becomes and, since Telstra's business is not cyclical and very unlikely to evaporate overnight, this places a floor under the company's share price.
- The professionals aren't betting against it
Given all the negative news about how Telstra is going to be outcompeted by the likes of TPG Telecom Ltd (ASX: TPM) and the like, readers might expect that the company is being heavily short sold. That's not the case, with just 0.7% of its shares held for short sale. That still reflects a pretty sizeable bet, but the short volume is less than at some of Australia's big banks or miners.
- The business
Telstra remains one of the most powerful brands in Australia, and the #1 go-to for mobile customers. That's unlikely to change in a hurry, and the company is investing heavily in its network and products to ensure it remains a market leader. In fact, Telstra's dividend, combined with the reliability of its earnings, could make it a market-beating investment even with no profit growth.
