TLS share price in focus
Starting life as a state-owned enterprise, Telstra has gone through many stages to today be Australia’s largest telecommunications company by market share. They provided over 22.5 million retail mobile accounts in 2023.
Telstra is responsible for building and operating telecommunication networks. Revenue comes from a range of activities including fixed broadband, mobile, data and IP, and digital media. The company has also expanded outside of Australia to over 20 countries where it provides services to governments and businesses.
The competitive 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%.
WES shares
Wesfarmers is a diversified Australian conglomerate headquartered in Perth. It’s essentially a listed investment company with outright ownership or significant stakes in companies across retail, chemical, fertiliser, industrial and safety brands and products.
Wesfarmers has a long history of buying businesses, re-investing in them to grow cash flow and assets, then selling them off for a higher price. A good example of this is Coles Group, which it bought in 2007 and spun out in 2018. However, by far (over 50%) of the company’s operating profit comes from Bunnings Warehouse, the #1 hardware and home improvement business in Australia (and the country’s most trusted brand in 2023 & 2024). Wesfarmers originally bought into Bunnings in 1987, buying the final 52% in 1994 for $594 million.
Other household names owned by Wesfarmers include Blackwoods, Kmart, Target, Officeworks, and Priceline Pharmacy. Wesfarmers has been a leading blue chip stock on the ASX for decades and is known for paying a consistent dividend.
TLS share price valuation
One way to have a ‘fast read’ of where the TLS share price is could be to study something like dividend yield over time. This can give us a sense of the stability of the company and whether they can consistently pay out a percentage of profits.
Remember, the dividend yield is basically the ‘cash flow’ to a shareholder, but it can fluctuate year-to-year or between payments. Currently, Telstra Group Ltd shares have a dividend yield of around 4.63%, compared to its 5-year average of 3.62%. In other words, TLS shares are trading higher than their historical average dividend yield. Be careful how you interpret this information though – it could mean that dividends are growing, or it could mean the share price is falling, or both. In the case of TLS, the annual report shows last year’s dividend was greater than the 3-year average, so the dividend has been growing.
WES is offering a historical dividend yield of around 2.74%, which compares to its 5-year average of 3.36%. Of course, this is just one of many ways you could put a value on WES shares. The Rask websites offer free online investing courses, created by analysts explaining valuation methods like Discounted Cash Flow (DCF) and Dividend Discount Models (DDM). They even include free valuation spreadsheets! It’s important to look at multiple methods when you’re trying to value the WES share price.
