The Telstra Group Ltd (ASX:TLS) share price is down around 2.5% since the start of 2024. The Woolworths Group Ltd (ASX:WOW) share price is about 8.5% off its 52-week low.
TLS share price in focus
Telstra was founded in 1975 and is Australia’s largest telecommunications company by market share providing over 22.5 million retail mobile accounts in 2023.
Telstra is responsible for building and operating telecommunication networks and has a range of businesses including fixed broadband, mobile, data and IP, and digital media. The company also has a presence in over 20 countries outside of Australia where it provides services to governments and businesses.
The 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%.
WOW shares
Founded in 1924, Woolworths is a retail operator in Australia and New Zealand with over 3,000 stores and over 100,000 employees. It is one of Australia’s largest companies in terms of revenue and market share.
Woolworths’ main operations include supermarkets (under the Woolworths brand in Australia and Countdown in New Zealand), retailing through its discount department stores under the Big W brand, and business-to-business (B2B) brands like PFD. However, its 35%+ market share of Australian groceries is undoubtedly its crown jewel.
Woolworths is a very popular choice for many ASX investors seeking dividend income. Historically, it has consistently paid a fully franked dividend, usually at a yield of over 3%, and offers a very defensive earnings stream with most revenue coming from consumer staples. Its competitive advantage is best summarised as scale (distribution, low costs, etc.) and proximity (most shoppers still shop based on distance to the supermarket).
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 through time. Remember, the dividend yield is effectively 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 4.65%, compared to its 5-year average of 3.62%. Put simply, TLS shares are trading above 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, last year’s dividend was greater than the 3-year average, so the dividend has been growing.
WOW is offering a historical dividend yield of around 4.41%, which compares to its 5-year average of 2.92%.The Rask websites offer free online investing courses, created by analysts explaining things like Discounted Cash Flow (DCF) and Dividend Discount Models (DDM). They even include free valuation spreadsheets. Both of these models would be a better way to value the WOW share price.”)
