Should I Sell My Telstra Shares?

Hi Scott,

I was one of the sheep who bought Telstra in the floats (T1 and T2) when the government thought it would be a good time to sell off taxpayers’ assets. I have been a long-term investor -- I have been holding them for 20 years and they have delivered me bugger all! Now they have come out and cut their dividend, the share price has been shredded even more. So my question is, should I just sell this dog?

Tim

Hi Tim,

The first thing to understand is that the stock market doesn’t give a stuff about what price you bought Telstra for.

Seriously, it’s totally irrelevant.

The only thing that matters is what the price is today.

So you need to ask yourself this question: “Knowing what I know now, would I buy Telstra shares today?”

If you wouldn’t, sell them. If you would, keep them. It’s that simple.

Personally, I’m a Telstra shareholder … and I’ve been buying Telstra shares recently.

Why?

First, because data is about to explode, as the internet goes from your computer to syncing up to your fridge, your washing machine, and every other smart device.

Second, the NBN is proving to be quite the white elephant. While it’s true that Telstra has (sensibly) decided to stop paying out all its profits in dividends to shareholders … this decision is in part to fund the roll out of their 5G mobile network, which could eventually eat the elephant.

Finally, while the dividend has been cut, on the revised numbers it’s still delivering around 6 per cent fully franked. They’re my reasons for continuing to hold the dog-and-bone, anyway. Over to you.

Scott