Holding Telstra Shares? A Potential 18% Gain in 2024 Could Be in Sight

January 30, 2024 09:02 PM AEDT | By Team Kalkine Media

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Holding Telstra Shares? A Potential 18% Gain in 2024 Could Be in Sight — Image source: shutterstock

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If you're a shareholder of Telstra Group Ltd (ASX: TLS), you may have noticed a lack of substantial share price gains in recent months. Despite an impressive 60% surge between October 2020 and May 2022, reaching a 52-week high of $4.46, Telstra shares have stagnated since then. Currently trading at $3.98, a 10.8% dip from the peak.

Despite this plateau, Telstra's renowned dividends, currently offering a fully-franked yield of 4.25%, have provided solace to investors. However, ASX broker Goldman Sachs sees potential for Telstra to break out of its recent pattern. Amidst discussions about Telstra's performance, investors are also keeping an eye on the broader landscape of ASX communication stocks for potential shifts and opportunities.

Goldman Sachs recently reiterated its bullish stance on the ASX 200 telco, assigning Telstra shares a buy rating with a 12-month price target of $4.70. This target implies an 18.1% increase from the current share price of $3.98.

Goldman attributes its optimistic outlook to Telstra's "low-risk earnings (and dividend) growth" anticipated from FY22 to FY25. The broker envisions an 18 cents per share fully franked dividend for the 2024 financial year, rising to 19 cents per share in FY2025.

Telstra investors are likely pleased with the prospect of a fully-franked 4.77% yield by FY2025, especially considering the telco's historical resilience in maintaining shareholder income, even during challenging periods like the pandemic. While the market will ultimately determine the accuracy of Goldman's projections, the broker's positive outlook reflects confidence in Telstra's ability to deliver consistent returns and dividends in the coming years.

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