TLS share price in focus
Telstra was founded in 1975 and is Australia’s largest telecommunications company by market share providing over 22.5 million retail mobile accounts in 2023.
Telstra is responsible for building and operating telecommunication networks and has a range of businesses including fixed broadband, mobile, data and IP, and digital media. The company also has a presence in over 20 countries outside of Australia where it provides services to governments and businesses.
The advantage that Telstra has over competitors lies in its reach and scale, providing coverage to 99.6% of the Australian population and 5G services to over 85%.
Since we consider Telstra Group Ltd to be a blue chip stock, or a mature business, we like to look at things like return on invested capital (ROIC) and revenue growth as signs of sustainability. In FY23, Telstra Group Ltd had an ROIC of 10.20% and revenue has compounded at 2.1% in recent years. Anything over 10% ROIC is pretty strong for a mature-style business, since its cost of capital is likely below that level, so Telstra Group Ltd crosses this hurdle.
SOL shares
Founded in 1903, Washington H. Soul Pattinson (WHSP) is an investment company with a diversified portfolio of assets across a range of industries and asset classes.
Some of SOL’s largest holdings include stakes in other well-known publicly listed companies such as TPG Telecom (ASX: TPG), New Hope Group (ASX: NHC) and a cross-shareholding in Brickworks (ASX: BKW).
SOL’s mission is to deliver superior returns to its shareholders by creating capital growth and steadily increasing dividends as a holding company. It’s the second-oldest publicly listed company on the ASX and has a strong track record of capital growth and dividends. In fact, it’s never missed a dividend payment since listing in 1903! It should be thought of as a family-run LIC, for the benefit of all shareholders (who are deeply aligned).
TLS share price valuation
One way to have a ‘speedy read’ of where the TLS share price is, is to study something like dividend yield through time. Remember, the dividend yield is effectively the ‘cash flow’ to a share holder, but it can fluctuate year-to-year or between payments. Currently, Telstra Group Ltd shares have a dividend yield of around 4.59%, compared to its 5-year average of 3.62%. Put simply, TLS shares are trading above their historical average dividend yield.
SOL is offering a historical dividend yield of around 2.49%, which compares to its 5-year average of 2.44%. The Rask websites offer free online investing courses, created by analysts explaining things like Discounted Cash Flow (DCF) and Dividend Discount Models (DDM). They even include free valuation spreadsheets. Both of these models would be a better way to value the SOL share price.
