The Telstra Group Ltd (ASX: TLS) share price has gone up again, hitting a level not seen since 2017.
Earlier today, Telstra shares hit a multi-year high of around $4.24, marking another step in its long-term recovery.
What’s going on?
It has been a slow and steady burn for the business since October 2020 when it hit $2.68, which was well after the COVID low in March.
But, since then, Telstra shares have risen by over 50% with the telco implementing a number of measures that have helped re-energise investor confidence in the business.
Its T22 and T25 strategies have been integral to that.
Those two plans have meant that the business has managed to sell some assets to raise money, cut costs (including jobs), make a lot of progress on rolling out its 5G network and improve profit margins.
The business has made so much progress that the Telstra board are now increasing the dividend again for shareholders.
Can the Telstra share price keep rising?
I think it can.
The business is doing an excellent job of staying ahead of rivals with its network, which in turn is winning it more customers, and enabling it to invest more in the network. It’s a very positive cycle for the business.
It’s planning to increase profit margins over the next two years, which I think will be a very good thing. Investors typically like seeing rising profit from their investment.
Telstra is expanding overseas with its Digicel Pacific acquisition and the business is also working on growing in the digital healthcare space.
While an increasing number of subscribers is an obvious boost for the company’s net profit, I think the potential for Telstra to supply 5G home internet for household WiFi use is exciting because that would mean capturing market share from the NBN, taking a lot of that margin as well.
It’s also benefiting from a return of tourists who still want to use their phones. More users means more earnings for Telstra
If Telstra can just keep growing its subscriber numbers, benefit from stronger profit margins and grow the dividend, then I think the Telstra share price and total returns will beat the market’s total return in the medium-term.
It’s now one of my preferred blue chip ASX dividend shares.