When we think about reliable ASX blue-chip shares, Telstra Group Ltd (ASX: TLS) may be one of the names that springs to mind.
Shaw and Partners senior investment adviser Jed Richards has identified the ASX telecommunications share as a large-cap stock to hold.
Richards described Telstra as the business with "the most commonly used mobile and broadband services" in Australia.
According to reporting by The Australian, the expert from Shaw and Partners has called Telstra shares a hold (though not a buy) for a few positive reasons.
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A shift of investor views
Richards suggested that the market historically viewed Telstra as a growth stock as technology and data usage increased across Australia.
However, as the chart below shows, the Telstra share price has fallen over the past decade – it's down 38% from February 2015.
The expert said that with the decline of the ASX telco share's valuation, it's now priced as a value stock with "strong cash flows".
Following that decline and considering the outlook for Telstra shares, he had a few reasons to be positive about the company.
Why we can be optimistic about Telstra shares
The Shaw and Partners investment expert points out that Telstra generates consistent revenue and also pays shareholders regular dividend payments.
Richards believes those two factors make Telstra a "favourite Australian blue-chip for income-focused investors".
In the 2024 financial year, Telstra's board declared an annual dividend per share of 18 cents. This came after 1% underlying total income growth to $23.4 billion, 3.7% underlying operating profit (EBITDA) growth to $8.2 billion, and 7.5% underlying net profit after tax (NPAT) growth to $2.3 billion.
At the current Telstra share price, its FY24 dividend translates into a fully franked dividend yield of 4.4% and a grossed-up dividend yield of 6.3%, including franking credits.
The Shaw and Partners senior investment adviser explained why Telstra's profit could keep growing in the future:
As data usage continues to grow, Telstra is well placed to continue delivering good solid results for Australian investors.
Telstra share price valuation
Commsec forecasts value the Telstra share price at 20.6x FY25's estimated earnings.
