Despite the Telstra Corporation Ltd (ASX: TLS) share price rising 2% yesterday, it is still down sharply over the last 12 months.
In fact, as of yesterday's close the telco giant's shares had lost 21% of their value since this time last year.
Does this make Telstra a bargain buy?
Whilst I wouldn't necessarily class Telstra as a bargain, I do believe that its shares are still great value at a little over 13x trailing earnings.
Especially for income investors. There are few shares on the Australian share market that provide as big a yield as Telstra.
Investors that snap up shares at today's price will receive a fully franked 7% dividend over the next 12 months should the telco giant maintain its current pay out.
Whilst there are concerns that both the decision by TPG Telecom Ltd (ASX: TPM) to launch Australia's fourth mobile network and weaker-than-expected NBN margins could impact Telstra's earnings and force it to cut its dividend, I remain confident that its sizeable cost-cutting program will prevent this from being the case.
Telstra plans to achieve at least $1 billion in net productivity over the next five years.
But I agree with Goldman Sachs that these estimates are conservative and believe there are significant cost-saving opportunities from self-help services and automation.
Should you invest?
Overall I think this makes Telstra a great option for investors and a good alternative to the big banks for those in search of dividends.
