If I were thinking about building passive income from ASX shares, I would be looking for reliability.
I’d want businesses that generate consistent cash flow, have clear competitive advantages, and can return capital to shareholders year after year.
For me, Telstra Group Ltd (ASX: TLS) shares tick a lot of those boxes right now.
Here are five reasons why I would be comfortable buying its shares for income.
A business built on essential services
At its core, Telstra provides something that has become non-negotiable.
Connectivity.
Mobile networks, broadband, and infrastructure are now essential to everyday life. Individuals rely on them, businesses depend on them, and governments need them.
That gives Telstra a level of demand stability that I think is incredibly valuable for an income investment.
It is not a business that relies on discretionary spending. It is part of the backbone of the economy.
Strong and growing cash earnings
One thing I always look for in a dividend stock is whether the earnings actually support the payout.
In Telstra’s case, I think the answer is yes.
In the first half of FY26, the company delivered earnings growth across key segments, with management highlighting strong cost control and disciplined capital management as key drivers.
Importantly, it also achieved solid cash EBIT growth and positive operating leverage, which suggests the business is becoming more efficient over time.
That is exactly what I want to see backing a dividend.
A clear focus on sustainable dividends
Telstra has been very explicit about its dividend strategy.
Management has stated its aim to deliver a sustainable and growing dividend, supported by strong cash earnings and a long-term target of mid-single digit growth.
That’s important.
It tells me that dividends are not an afterthought. They are a core part of the company’s capital management framework.
The latest interim dividend of 10.5 cents per share, with high levels of franking, reinforces that commitment.
Additional capital returns
Income is not just about dividends.
Telstra is also returning capital through share buybacks, which can support earnings per share growth over time.
The company recently increased its on-market buyback to up to $1.25 billion, reflecting confidence in its financial position and outlook.
For me, that adds another layer to the investment case.
It suggests management sees value in the shares and is willing to return excess capital to shareholders.
Positioned for steady long-term growth
Telstra is not a high-growth company, and I think that is perfectly fine.
What I care about is steady, predictable progress.
The company’s Connected Future 30 strategy is focused on strengthening its core network, improving efficiency, and driving sustainable earnings growth over time.
It is not about chasing rapid expansion. It is about building a stronger, more resilient business.
For an income investor, I think that is exactly the right approach.
Foolish takeaway
Telstra may not be the most exciting ASX share, but I think it is one of the more dependable when it comes to passive income.
It operates in essential services, generates strong cash flow, and has a clear commitment to returning capital to shareholders.
With dividends supported by earnings and additional buybacks in play, I believe it offers a compelling mix of income and stability.
For me, that is exactly what I want from an ASX dividend stock.
The post 5 reasons why I’d buy Telstra shares for passive income appeared first on The Motley Fool Australia.
Should you invest $1,000 in Telstra Corporation Limited right now?
Before you buy Telstra Corporation Limited shares, consider this:
Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Telstra Corporation Limited wasn’t one of them.
The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
And right now, Scott thinks there are 5 stocks that may be better buys…
* Returns as of 20 Feb 2026
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More reading
- Telstra just hit a 10-year high. Has this ASX income giant still got more to give?
- How to build a defensive ASX share portfolio in 2026
- 3 blue-chip ASX dividend shares to buy and hold
- How to become a millionaire with a $5,000 investment in ASX 200 shares each year
- Building an ASX share portfolio from scratch? Here’s my game plan
Motley Fool contributor Grace Alvino has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.