Is Telstra Corporation Ltd the ASX's best dividend stock?

Telstra Corporation Ltd offers healthy exposure to Asia, and a juicy fully franked dividend.

It's been a great ride for Telstra Corporation Ltd (ASX: TLS) shareholders in the post-GFC world.

Over the past five years, not only has Telstra's share price significantly outperformed the broader S&P/ASX 200 (ASX: XJO) it's continued to pay out a reliable fully franked dividend of at least 28 cents per share.

So is Telstra a proxy for low-interest rates? It certainly appears so.

Telstra: Growth or Income?

Despite its 66% outperformance of the ASX 200 index, however, Telstra's recent success has been largely a result of efficiency gains from divestments and an updated strategy.

Indeed, although Telstra's share price has risen 86% since July 2010, profit has risen 15% on the back of revenue growth of just 1.2%. Meanwhile, earnings and dividends per share have climbed 9.5% and 5%, respectively.

While the top line (revenue) perhaps hasn't expanded as quickly as many investors would've liked, former CEO David Thodey, made a number of meaningful changes at Telstra in order to transform and prepare it for the next decade of growth.

Divestments of non-core and underperforming businesses were well received by the market.

The full divestment of Hong Kong mobiles business, CSL, and partial sale of Sensis were pleasing.

In addition, the signing of a lucrative agreement with the government's NBN Co, and initial public offering of China's largest automotive listing website, autohome.com.cn, have filled Telstra's coffers.

However, one of Mr Thodey's most important legacies is that of Telstra's revitalised brand.

Five or 10 years ago, many consumers would've dreaded walking into a Telstra store or calling customer service.

Fast forward to now, and Telstra's investment in customer service, as well as infrastructure, has begun to pay dividends. For example, it has been able to increase total mobile customer numbers while also increasing profitability.

Figure 01. Telstra continues to dominate the Australian mobile market.

Source: Annual Reports.

Telstra's ability to maintain or grow market share in the local mobile market will be imperative to its future growth abroad. This is especially true in the wake of the NBN Co rollout, which will see Telstra relinquish ownership of its lucrative 100-year-old copper cable network.

Figure 02. Telstra's revenue is well-diversified across business lines

Source: Annual Reports.

Under its current CEO Andy Penn, Telstra will continue to invest heavily in Asia. Previously, the group stated its ambition is to generate one-third of revenues from the region by 2020.

The company's recent $850 million purchase of subsea cable operator, Pacnet, complements its data centre rollout across Asia Pacific.

Moreover, partnerships with established telecommunications companies, such as India's Tata Communications and Indonesia's Telkom, affords Telstra healthy exposure to enormous telecommunications markets.

Of course, much work needs to be done, and securing a dominant position in any of the major Asian markets appears nothing short of a pipe dream.

Nonetheless, Telstra is not void of growth potential abroad.

Locally, the rise of machine-to-machine communication (that is, smart devices), eHealth, big data and cloud computing bode well for modest revenue growth over the coming decade.

Buy, Hold or Sell?

Telstra undoubtedly appears to be one of the most promising dividend stocks on the entire ASX.

However, if you want a slice of Telstra, you'll have to pay up because its shares appear to be trading around fair value.