TLS - Telstra Corporation

[MrBurns]

Touched $4 yesterday, is the run over ?

 

[tinhat]

Touched $4 yesterday, is the run over ?

At $4 it is still yielding 7% before franking credits.

 

[MrBurns]

At $4 it is still yielding 7% before franking credits.

For how long ?

This time bext year ?

 

[tinhat]

For how long ?

This time bext year ?

Surely we have discussed this already at length? Dividend is expected to remain at 28c until 2014. Capital management of excess cash due to the NBN compensation will be done once there are sufficient franking credits for dividend increase, special dividends, etc. which will be 2014 and beyond.

 

[MrBurns]

Surely we have discussed this already at length? Dividend is expected to remain at 28c until 2014. Capital management of excess cash due to the NBN compensation will be done once there are sufficient franking credits for dividend increase, special dividends, etc. which will be 2014 and beyond.

If it's so good why was the price suppressed for so long ?

 

[sval62]

If it's so good why was the price suppressed for so long ?

Your just cranky because you did not get in at the right price.
Stick with term deposits .

 

[MrBurns]

Your just cranky because you did not get in at the right price.
Stick with term deposits .

If you cant answer the question don't waste peoples time with BS - thanks

 

[Bintang]

If it's so good why was the price suppressed for so long ?

I think it has been a combination of the following:
1) General negative sentiment due to Telstra T2 purchasers having got badly burnt (they bought at $7.40)
2) The sell-off by the Future Fund
3) A lot of small investors not understanding the benefits of franking credits

For the last point read the following article:
"Dividends and franking credits are underestimated by investors"
by James Dunn, The Australian, July 09, 2011 12:00A

www.theaustralian.com.au/business/wealth/dividends-and-franking-credits-are-underestimated-by-investors/story-fn92b2g9-1226091024260

For the kind of reasons explained in this article I believe TLS share price has a long way to run, especially as bank interest rates have fallen further since the article was written.

For me personally I will keep buying TLS up to a price of $4.95, at which point I will consider it fully valued.
This is based on my judgement that TLS can at least maintain its 28 cents per share dividend long term and that interest rates will remain depressed long term, i.e. my TLS valuation does not depend on an assumption of dividend growth.
I also consider a more conservative valuation based on the assumption of lower dividend yields after 2014 but even then I come to a valuation of around $4.60 (i.e. that being the maximum price that I would be prepared to pay for a TLS share today)
If a dividend growth assumption is factored into the analysis it will give a higher valuation than $4.95.

But you have to make your own judgement according to your own circumstances.

 

[MrBurns]

But you have to make your own judgement according to your own circumstances.

Thank you Bintang, much appareciated, the only other thing is if it's scrapped, little chance of that now , but what if ???

 

[MrBurns]

I've just read through a lot of but certainly not all the posts in here and I can say that negativity is easy there's plenty of that but the positive posts by credible posters are the ones to watch.

The one that stands out is when someone said I shouldn't bother with shares, they're probably right, not without a very good adviser at least.

 

[Bintang]

Thank you Bintang, much appareciated, the only other thing is if it's scrapped, little chance of that now , but what if ???

Well in that case I am screwed along with all the other Telstra shareholders but I will take my chances nonetheless.

There is risk with every investment decision and judging that risk should be part of making the decision. If I seriously thought Telstra was completely risk free my valuation would be higher than $4.95 (maybe even as high as $7.00) because I would use a lower discount rate. But the reality is TLS is not risk free. So if TLS does reach $4.95 and the outlook for dividends remains at 28 cents/share I would prefer to keep spare cash in a term deposit rather than buy more TLS shares at that price. But these are just my personal judgements and I could be wrong.

 

[MrBurns]

Well in that case I am screwed along with all the other Telstra shareholders but I will take my chances nonetheless.

Looks like chances are very much in favour of it continuing -

Gillard adamant on NBN despite Coalition policy shift From: AAP July 02, 2012 11:15AM

PRIME Minister Julia Gillard insists only Labor will build the national broadband network despite the coalition's backflip on cancelling the project.
After promising to terminate the NBN if it comes to power, Opposition communications spokesman Malcolm Turnbull has been quoted by Fairfax as saying the coalition won't cancel an estimated $1.8 billion worth of contracts already signed by NBN Co.

Asked about the coalition's change of heart, Ms Gillard said only Labor could guarantee the $36 billion project, which the government expects to have completed by late 2020.

"The only government that will build the national broadband network is this Labor government," Ms Gillard told reporters in Melbourne on Saturday.

However the coalition has changed its tune, saying it will continue with the rollout.

http://www.theaustralian.com.au/aus...ion-policy-shift/story-e6frgakx-1226414351617

 

[MrBurns]

Can someone tell me when the best time to buy TLS is, what I mean doesn't it dip when the dividend is paid ???
I dont know about these things but if someone could enlighten me, I think I may dip a large toe in the water.

 

[pixel]

Can someone tell me when the best time to buy TLS is, what I mean doesn't it dip when the dividend is paid ???
I dont know about these things but if someone could enlighten me, I think I may dip a large toe in the water.

TLS has run very hard, on the back of uncertainty that caused many investors to look for perceived "value" and yield. At close to 14-times earnings, I'd call TLS overbought and not much use buying here for 7% yield; I had to hold far too long for the franking credits. The extra 3% could easily be wiped out in a normal-sized correction.



As regards "buy when?" for dividend, there are various theories about dividend stripping, buying-holding, etc. None of them are effective every time; to me, the chart tells the "right time" regardless of dividends.
But you're guessing correctly (IMHO) when you expect a drop after the ex-div date. The unknown elements are: by how much? and will the sp recover afterwards or keep dropping? What I wrote above makes me doubt it can hold on to current levels.

 

[MrBurns]

Thanks pixel, much appreciated

 

[Bintang]

Can someone tell me when the best time to buy TLS is, what I mean doesn't it dip when the dividend is paid ???
I dont know about these things but if someone could enlighten me, I think I may dip a large toe in the water.

I think TLS has peaked for the current cycle. It might drop back into the range 3.80 to 3.90, which could be another buying opportunity IMHO. But the question is for how long?

 

[MrBurns]

Dunno how you guys do it but it's now below $4.00, my best move in shares is just to observe

 

[drsmith]

Buy now Burnsie. The price is off about 5% in two days. You know if you don't now, you never will.

Hang on for a rise as it appraches the ex-div date and sell before ex-div for quick profit. See disclaimer below.

DISCLAIMER: I could be wrong.

Despite recent falls, the share price has risen strongly over recent months and I suspect this has been driven to some extent by investors chasing yield as interest rates have been falling. Headline profit while now inching in the right direction is only projected by the company to continue to grow slowly. If investor emphesis changes from yield to growth in the near term, the general trend in my view is that the share price would likely be to fall further in the near term.

Again when trying to predict these sorts of things, the above disclaimer applies.

 

[MrBurns]

Buy now Burnsie. The price is off about 5% in two days. You know if you don't now, you never will.

Hang on for a rise as it appraches the ex-div date and sell before ex-div for quick profit. See disclaimer below.

DISCLAIMER: I could be wrong.

Despite recent falls, the share price has risen strongly over recent months and I suspect this has been driven to some extent by investors chasing yield as interest rates have been falling. Headline profit while now inching in the right direction is only projected by the company to continue to grow slowly. If investor emphesis changes from yield to growth in the near term, the general trend in my view is that the share price would likely be to fall further in the near term.

Again when trying to predict these sorts of things, the above disclaimer applies.

Wow down to $3.89 I dont think I'd risk enough to make any worthwhile profit.

If it goes back up 20c invest $100,000, you only make $5,000 invest $500,000 = $25,000 that's worthwhile but the risk is greater too, or you could lose the same.

 

[Trembling Hand]

If it goes back up 20c invest $100,000, you only make $5,000 invest $500,000 = $25,000 that's worthwhile but the risk is greater too, or you could lose the same.

Burnsie there seems to be two types of profitable traders. Those that are very lucking putting a lot on one or two stocks and getting on an incredible ride and the other type are the ones who know how to skew the numbers in their favour over 100s of trades. Not just the next one.

But only 1 of the above types ever become long-term profitable traders.

Seems very unwise to not plan or control risk with so much cash, only asking to be at the mercy of emotions.