ASX Shares Selling IP's to invest in Telstra Shares (TLS)

Most company analysis reports are biased, because the same shop is trying to get the company in question as a customer.

Everyone in finance knows a hold means a sell.

 

I say yes. Although I would be putting only part into TLS and the rest into a high div etf.

 

Same applies to continuing to hold property in Sydney.

 

Personally I think Telstra is a pretty solid bet. I'd certainly diversify though, maybe with an index fund.

 

OK KB, I'm going out on a limb... I think you are right that the NBN is out of coin... the ROE is going to be awfully S H 1 Thompson and it will suffer a terribly hideous (for someone, that's probably all of us...) writedown, to bring the ROE up, and then it will be sold off to an entity that has the infrastructure to run (and I use the term loosely) a national communications network.

Guess who?

 

Yup this scenario has a very good chance of playing out.

Of course, if it does happen, the Chinese would be VERY interested to buy the NBN but won't have a chance due to security concerns. So either Telstra/Optus/TPG will be possible mergers. But Telstra probably has the most influence over Canberra and since a lot of NBN is riding on their infrastructure they would be the obvious choice in such a case.

The NBN was a good idea but as usual as with many of our gov projects they tend to go overbudget, overtime due to poor execution and too many people sitting around the table talking too much with too little action.

So in the longer term 10yrs++, buying Telstra now would be like buying property. You'll have plenty of fully franked dividend cashflow and the stock will probably double or triple in the longer term. And you can even happily leverage this stock during the lows, there is no way this cash cow is gonna get in trouble balance sheet wise.

There really is not much that can break the Monopoly of Telstra telco infrastructure wise. Optus and TPG are just there to provide a bit of competition.

 

Telstra is a fairly diversified corporation. I would love to hold some of that stock.

 

They are only $4.82. If you want to hold, why not buy some?

 

The Telstra share price will drop tomorrow to under $4.70, its lowest point since June 2013, nearly 4 years ago. In those 4 years, global stock markets have been hitting record highs.

How long before growth investors (if there were any remaining in Telstra) completely exit, and only yield investors remain?

The issue with having only yield investors is that if you decide to reduce dividends, they generally punish the share price hard. Telstra may need to reduce dividends as their company CAGR has been well below expectations.

With the seemingly growing interest in the stock market on this property forum, I hope my property-expert friends here see beyond a "historically cheap" share price...

PP

 

Telstra $4.63 today. Growth investors running out of nurofen. Buy nurofen maker, Reckitt Benckiser at 52-week high!

PP

 

Telstra is a classic dividend/low growth stock. Hence growth investors wont be owning this one.

Telstra has a history of increasing its dividend payout foralmost the past 20years, giving specials when things were going good and even maintaining it during hard times like the GFC. Unlike mining giants like BHP/Tinto, the sector it operates in is much less volatile and resilient to economic shocks and price fluctuations.

If you owned since June 2013, you would have had a handsome $1.05 of fully franked dividends collected.

Of course investments in growth plays will look good when the market goes up but passive / dividend investing is more about compounding. And when the market tanks, investors will be flocking to stalwarts like Telstra ;D

Anyone vested in Telstra 20 years ago and had reinvested their dividends and used compounding would be laughing all the way to the bank if they were to retire today

 

Past performance is not indicative of future results. My note is not that Telstra was not a good pick 5,6 or 20 years ago, but to warn against "historically cheap" reasoning behind buying a stock today.

As I said Telstra has vast majority yield investors. What happens when they stop increasing dividends, or actually cut them in the face of stagnating growth? Relying on one main source of investor money means you are open to punishment if you are no longer delivering to the expectations of what they invested in you for.

PP

 

Ex dividend?

 

You are correct

 

So, let me get this straight. Lets say you now buy 5000 Telstra shares (@ $4.63/share) from your offset account, it will cost you $23,150 +brokerage. Then:

1.In a year you will have 2 dividends payed out at say 15.5c and 16c, which is $775+$800 = $1575. Since 30% tax has been payed due to the franking, you would be liable then for another $155 in tax, assuming your marginal rate is 40%?
2. The additonal interest payable on the loan at $3.85% would be $891

So, in simplest terms does that mean you are $709 better off per year? (ie 1575-891-155)

You would also carry the risk of a capital loss (ie share price drop) with the shares, but thats where the risk is.

 

Yesssss, but:

• gross dividend return is pretty good at 6.8% - better than the average yield in most places. Don't forget property yield ignores all the costs since it's just based on value and rental income (not management fees, maintenance, land tax, insurance, rates, body corp fees, fire alarm fees).
• if you paid $23,150 off your home loan (PPOR preferably) and then take it out again as a LOC, then you could make the $891 interest tax deducting as well (returning 40% = $356). So you would be $709+$356 = $1065 better off, or a nett yield of 4.6%...without tenant issues or any of fees or worry about maintenance of older buildings.
• Tomorrow, Telstra could go up 5% - haven't seen property do that! oh, and it could drop 10% too
• Change to LICs and ETFs, and your capital loss risk reduces. Is it enough? Up to you!

 

Don't know much about LIC's, ETF's. Do they trade like normal shares, pay dividends etc....?
Can you name a few..,. perhaps some of the more recommended ones that I can have a read about?

 

Yes, just like shares. There is an ETF thread, an LIC thread and a beginner guide to LLCs thread. Sorry I can't link to them. On my phone

@austing should be able to help

 

Listed Investment Companies (LICs)
?

 

Can you show when this happened with TLS ==so many media prophets the same as real estate media prophets with special visions particularly when the silent character of the truth comes out and understanding random effects..