Is the Telstra Corporation Ltd (ASX: TLS) share price a buy after the election?
Unlike most of the ASX, Telstra has not seen gains today with the share price down around 1% whereas other dividend shares like Commonwealth Bank of Australia (ASX: CBA) rose 6.2% and the Westpac Banking Corp (ASX: WBC) share price which went up 8.7%.
Telstra is not quite the high yield dividend share that it once was with a huge dividend yield. The recent dividend cuts has seen the forward dividend yield drop.
Based on the current share price and an annual dividend per share of 16 cents it has a grossed-up dividend yield of 6.5%. Even so, the franking credits are still worth around 2% for the yield.
The Coalition is not likely to alter its plans for the NBN, whereas Labor wanted to try to improve certain elements of the plan.
Labor also seemed more willing to consider a writedown of the value of the NBN, which would have allowed the NBN to charge a lower price to telcos, which could have then earned the telcos a higher profit margin. This may still happen, but it is a little less likely.
During 2019 the Telstra share price has risen by 27%, which is a solid performance by the telco. But with it now trading at 14x FY20's estimated earnings I'm not sure how much more sentiment can push it without a recovery of earnings.
Foolish takeaway
Telstra is not my favourite ASX20 business, I think the industry dynamics just don't favour it at the moment, the NBN and a competitive mobile space has led to Telstra's profit margin lowering. However, 5G is the one bright spot in the future.
