This fund manager says Telstra Corporation Ltd will have to cut its dividend again
Tom Richardson | October 18, 2017
The Telstra Corporation Ltd (ASX: TLS) share price lost another 1.7 per cent today as it continues to trade near multi-year lows with many professional investors predicting that the mobile and internet services provider will have to cut its dividend again in the years ahead.
In fact according to reports out of Livewire markets, professional fund manager Daniel Mueller at Vertium Asset Management thinks that Telstra could be the biggest yield trap of 2017!
Mr Mueller has labelled Telstra as a “nightmare” for yield chasers and warned it may also be the biggest yield trap of 2022 for anyone still holding the shares. Ouch.
The big headwind Telstra faces is the NBN-related $3 billion profit hole it cannot fill, as the group struggles for investment ideas to generate dial-moving returns.
Mr Mueller estimates that Telstra will only earn around 22 cents per share come 2022, which means its dividends per share will be less than 20 cents based on its dividend payout policy of 70%-90%.
If Mr Mueller’s predictions come true then Telstra’s share price could be lower in 2022 than today’s closing price of $3.49.
In that case investors would be much better off looking for shares that offer big dividends and serious prospects of capital growth.
courtesy of Motley Fool
( DYOR )
i hold TLS
i factored in a 20c ( 2 x 10c ) per year div. when the div. cut was first announced , when deciding to CAUTIOUSLY accumulate more TLS , i am still interested in adding more in the $3 to $3.20 renge .
should we have another share-market crash in the next 18 months , that miserable div. might still be comparatively good