"Telstra is in a yield sweet spot, but it's not clear that is enough, The AFR's Chanticleer columnist, Tony Boyd, writes:
As a former chief executive of Telstra, Ziggy Switkowski, who is chairman of NBN Co, must have felt some sympathy for Telstra CEO Andy Penn this week when he killed Telstra's $5.5 billion pull forward of future NBN receipts.
The only upside is that Telstra is now in the sweet spot for yield hungry investors. Its fully franked dividend yield is now about three times the level of the highest six-month term deposit.
When you combine Wednesday's closing price for Telstra of $3.60 and its forecast 2018 dividend of 22¢ a share you get a dividend yield of 6.11 per cent. Gross that up for dividend imputation credits and the yield is 8.7 per cent.
That is better than any grossed up yield from the four major banks.
It is ironic that many of the retail investors who have worn the pain of a 44 per cent plunge in the Telstra share price since 2015 are now among the biggest sellers of the stock. That is evident from its position in the top echelon of trades on the ASX.
Selling Telstra shares out of frustration over its cut in dividends will only leave the problem of where to put the money. It is hard to find a higher yield stock".
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