Forum Archive Index - February 2004

["tennyson@caverock.net.nz" <tennyson@caverock.net.nz>]

Hi winner69,
 
>
>Good little summary about Telecom result you posted earlier Snoopy
> 
>Are you still in Telstra as well?
>

Of course :-)......

> 
>When Telstra broke that downtrend that had lasted a few years I got
>some, earlier than Phaedrus would have approved, and although 
20% up
>the 500 mark in OZ seems to be a bit of a hurdle to get over.
>

It is actually a low risk strategy buying something that you have figured 
out with your F/A is cheap no matter what the trend is doing.  The 'buy 
price risk' in waiting for the T/A to give you the bottom turning point on 
the share price chart is IMO usually higher than the risk of missing out 
on a cheap bargain when the share price jumps suddenly.  Your 'early 
entry' to Telstra will have stood you in good stead Winner69.

Telstra is still being punished for failing to make their growth forcasts 
work in Asia.    As an aside, I spent a few days in Australia late last 
year and brought back a copy of the business page of the Weekend 
Australian.

Now here is a little question for you.   Ther following shares are all 
from the ASX top 150.  (I have excluded any dual listed New Zealand 
shares from the following list). 

Question:
Now what is it that these ten companies all have in common?

National Australia Bank
Commercial Bank of Australia
ANZ Bank
Qantas Airways
Tabcorp
Paperlinx Ltd
CSR Limited
Smorgon Steel
Ten Network
Onesteel


Tick, tick tick, tick
(Scroll down when you are ready for the answer)






Answer:

Excluding property trusts, these are the only top 150 companies with a 
higher dividend yield than Telstra!    Perhaps that is hard to believe 
when Telstra is only yielding just over 5% in Australia, but true.

Now let's say you are an income investor in Australia.   Where do you 
put your money?    The prospects of CSR, Smorgon and Onesteel 
might be expected to decline with the building boom cooling off.  Rises 
in interest rates might see some more bad debts on the books of the 
banks.  The airline business is notoriously fickle.  Battling it out in the 
TV network wars is never a sure thing.  And we all know the margins 
for paper products stink.   Faced with the alternatives, the yield on 
Telstra at just over 5%, must look pretty attractive to the Australian 
investor.     

That means I would be very surprised if the Telstra share price went 
into a sharp reversal.    Sure TLS doesn't look that cheap to us kiwis as 
we are used to much higher yields than 5%.    But it is only when you 
get the Oz paper in front of you that you realize how cheap Telstra is to 
the Australian investor.

Put like that, I think Telstra slips comfortably into the 'must hold' 
category for the portfolio investor.    No I don't think you will make your 
fortune on it.  In $A terms I'd be surprised if the total return was more 
than 10% this year on TLS.   But equally the downside risk looks very 
limited too.

> 
>One thing about both TLS and TEL is that their performance has 
been
>pretty consistent lately.
> 

Yes they have both been quietly chugging along quite nicely.   I still  
think that longer term Telstra, being a much bigger fish, will give the 
better returns of the two.

SNOOPY

discl: hold TEL and TLS




--
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----------------------------------
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"A: Four.  Calling a tail a leg doesn't make it a leg."



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