We have Telstra in the MM Income Portfolio with a 4% weighting, my only concern around this holding is our weighting i.e. not enough at 4%. This week we got more colour around there new corporate structure and in MM’s view, this is a game changer for the much maligned telco. There has always been value in TLS however aside from mismanagement, their structure has not allowed that value to be recognised. This is now being addressed. We’ve also spoken about their focus on free cash flow rather than earnings to underpin their dividend. The free cash flow number implies to us that a) the dividend is safe at least & b) there could well be upside from the current 16c.
TLS yields 4.8% fully franked at current prices and an attractive 5.5% fully franked from the $2.88 price we paid.
MM remains bullish Telstra (TLS) targeting $4
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