Why I'd buy and hold Telstra shares for a decade

The Telstra Corporation Ltd (ASX: TLS) share price has slumped 12% lower in 2020, but here's why it could be a long-term buy.

| More on:
telstra share price

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Telstra Corporation Ltd (ASX: TLS) shares have outperformed in 2020 despite broad market volatility. While the S&P/ASX 200 Index (ASX: XJO) has fallen 19.91%, Telstra shares are 'only' down 12.57% this year.

But despite holding value better than many of its ASX 200 peers, is the Aussie telco in the buy zone?

Why I'd buy and hold Telstra shares for a decade

Telstra has been a staple of Australian share portfolios for decades. The Aussie telco was favoured for its 100% dividend payout policy before slashing it lower in recent years. However, its shares currently yield a tidy 3.20% and, I believe, still have some serious upside.

Telstra is shaping up as a potential leader in the 5G network space. The group continues to invest heavily in the future which I think is key in this hyper-competitive industry. With NBN Co breathing down its neck, Telstra is focusing strongly on maintaining market share.

Innovation is also a key reason I'd buy and hold Telstra shares for a decade. The company's 'Telstra 2022' strategy illustrates forward thinking and, furthermore, the group is also focused heavily on slashing its costs. 

Having said that, the changing face of its competition has the potential to negatively impact Telstra's profitability. The proposed merger between TPG Telecom Ltd (ASX: TPM) and Hutchinson Telecommunications (Aus) Ltd (ASX: HTA) is shaping up to be a real threat to Telstra's long-term future. 

The merger would combine Vodafone's and TPG's capabilities and create another major player alongside Telstra and Optus. However, there is also the opportunity for Telstra to capture more market share amid an industry shake-up.

This means shares in the Aussie telco could see some real gains if its Telstra 2022 strategy pays off. Given its strong dividend yield in the short to medium term and a solid long-term growth outlook, I think there are worse buys than Telstra.

I also think the move towards working from home more could benefit Telstra. More remote working means increased demand for mobile infrastructure, which could benefit this market leader.

Foolish takeaway

Telstra shares have fallen lower in 2020, but it's important to invest for the long-term. I prefer to drown out the day-to-day noise and look at Telstra as a company to buy and hold for the decades ahead.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the 'five best ASX stocks' for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Technology Shares

A businessman stacks building blocks.
Technology Shares

6% gain! What's up with Block shares today?

Block shares are up more than 34% since 2 May.

Read more »

Happy work colleagues give each other a fist pump.
Technology Shares

Guess which ASX 200 technology stock has outperformed Nvidia over the past 5 years?

This company has been nothing short of impressive.

Read more »

Buy, hold, and sell ratings written on signs on a wooden pole.
Technology Shares

After surging 13% yesterday, are TechnologyOne shares a buy, hold or sell according to Macquarie?

Valuations matter when investing, and Macquarie feels no different.

Read more »

Two smiling work colleagues discuss an investment or business plan at their office.
Technology Shares

Why Goldman Sachs rates this ASX tech share as a top buy

Let's see why the broker rates this stock highly right now.

Read more »

A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer
Technology Shares

WiseTech shares have surged 34% since April. Is it too late to buy?

Can WiseTech shares keep charging higher? Here’s what this investing expert expects.

Read more »

A man in full American NFL playing kit crouches over with his arms across his chest in a defensive stance against a dark background.
Technology Shares

ASX 300 tech stock charges 7% higher to record high on stellar results

This tech stock delivered another impressive result this morning.

Read more »

a man sits at his desk wearing a business shirt and tie and has a hearty laugh at something on his mobile phone.
Technology Shares

Up 87% in 12 months: Why this ASX tech share is still a top buy

This technology business still has loads of potential, according to a fund manager.

Read more »

a group of three cybersecurity experts stand with satisfied looks on their faces with one holding a laptop computer while he group stands in front of a large bank of computers and electronic equipment.
Technology Shares

2 ASX 200 tech stocks Morgans rates as buys

The leading broker has named a couple of shares to buy right now.

Read more »