Morning Report Monday 21 July 2014
Telstra has underperformed other Telco’s - will this happen to the “Big 4 Banks”.
Over the past 5years, since the 2011 lows, the darling of the ASX with retail investors, Telstra (TLS), has actually been a major underperformer in the sector:
Above numbers do not include dividends, so while Telstra pays the better dividends, it is clearly the noticeable laggard. After a horrendous 11 years of poor performance where Telstra fell 72% from its highs, the market’s obsession with yield has made the it dominant “Telco.” It is now currently the market darling for the last 4 years, courtesy of its chunky fully franked dividend, currently at 5.25%. So that brings me onto the banks, as numerous domestic and offshore companies look hungrily at the “Big 4 banks’” multi-billion dollar profits. Recently, Coles (Wesfarmers) announced a plan to push into financial services starting by issuing personal loans. Earlier in the month, Macquarie Group issued a report stating that tech companies could grab almost 30% of major banks annual revenue. Often looking offshore is a great way to see future trends that Australia will embrace. The below two websites clearly demonstrate both UK giants Tesco’s and Sainsbury’s have penetrated financial services markets extremely successfully.
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