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Hold the phone! Why Telstra (ASX: TLS) Might Be a Dividend Stock to Buy

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If you want to add ASX dividend stocks to your portfolio, it might be worth considering Telstra Company Ltée (ASX: TLS) actions.

Why might Telstra be a dividend stock to buy?

Telstra could be a dividend stock to buy due to its outlook being the best in over a decade. This is supported by the successful execution of its T22 transformation strategy and the growth targets included in its new T25 strategy.

On the latter side, Telstra aims for sustained growth and value by targeting high single-digit underlying EBITDA and compound annual growth rates (CAGRs) for underlying earnings per share in FY2021. in fiscal year 2025.

Telstra CEO Andrew Penn commented: “T22 has been one of the biggest, fastest and most ambitious transformations of a telecommunications company on a global scale and today we are a very different business. “

“This means we are poised for growth as our society and economy become more and more digital and we work, study, process and put all of our entertainment online. These fundamental changes, along with the T25, will support our future growth and shareholder value, ”he added.

The answer

These plans were well received by analysts, and in particular the team of Goldman Sachs. The broker believes Telstra is well positioned to increase its dividend in the years to come and expects its first increase in almost a decade.

Goldman penciled in a fully franked dividend per share of 16 cents for fiscal 2022 and 2023, before increasing to 18 cents in fiscal 2024 and then to 19 cents in fiscal 2025.

Based on the current Telstra share price of $ 4.02, this implies returns of 4%, 4.5% and 4.7%, respectively.

Goldman also sees upside potential for the company’s shares. The broker has a price target of $ 4.40, which suggests the Telstra share price could rise almost 10% from current levels.


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