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Your thoughts on 2 related stocks

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Your thoughts on 2 related stocks

Gentlemen: With China's stimulus the 'go' button seems to be pressed on resources. As a contrary conservative play what are your thoughts on SPC & TLS for income and maybe a little growth? P.

Answer

Hi Paul,

We assume you meant Telstra (TLS) & Spark New Zealand (SPK), two different Telcos with attractive yield stories.

  • Telstra (TLS) $3.99: we are long TLS in our Active Income Portfolio hence your preaching to the converted. We liked their FY24 report in August and a mild upgrade to FY25 earnings guidance and although our position is up 40% we remain bullish for both yield (~5% ff) and capital gain, i.e. we can see a test of $4.50 before $3.50.
  • Spark New Zealand (SPK) $2.80: has struggled in 2024, falling -42.4% ytd compared to TLS which has slipped -2.2%. A combination of a downgrade & earnings miss is never a good look and shareholders have suffered accordingly. SPK has been a painful dividend trap in 2024 with the stock still estimated to yield more than 9% over the coming 12-months. While its hard to see a lot more downside from $2.80, we’re in no hurry to fight the downtrend just yet.
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Telstra Group Ltd (TLS)
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