Wilson and Aitken dissect Telstra

There was a time when Telstra was a staple of almost every Australian investor’s portfolio. Stable earnings and a big fully-franked yield meant that it never had problems attracting buyers. Things are different now. After cutting its dividend in August, Telstra is now down >30% year to date.

In the latest Thematic discussion, Matthew Kidman from Centennial Funds hosts Geoff Wilson AO from Wilson Asset Management, and Charlie Aitken from Aitken Investment Management. They pick apart the remains of Telstra to answer the question on everyone’s mind; is it time to buy Telstra?

Key points:

• Telstra faces a raft of serious problems; an unsustainable dividend, an income-hungry share register, and competition biting at its heels
• It needs to reduce costs significantly if it wants to remain the income favourite
• The share price pain could last a long time, as legacy shareholders slowly clear from the register
• Don’t buy stocks purely for yield, because the yield might go away.

More detail on Telstra:

• Daniel Mueller from Vertium Asset Management calls Telstra "The yield trap of 2017."
• Hamish Carlisle from Merlon Capital Partners takes a deep dive in his piece, "Telstra Revisited."
• Tim Kelley from Montgomery asks "Is Telstra finally cheap..?"

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