1 ASX dividend stock up 20% that I’d hold through any market

When I think about ASX dividend stocks, it’s hard to look past Telstra Group (ASX: TLS) shares.

At the close of the ASX on Thursday afternoon, Telstra shares were 0.19% higher at $5.34 a piece.

Thursday’s uptick continued the impressive gains the telco has made over the past 12-18 months. Earlier this month, Telstra shares reached a 10-year high of $5.44, and they’re still trading just shy of that level.

At the time of writing, Telstra shares are nearly 10% higher year to date and 20% higher than this time last year. That growth has been pretty gradual but consistent too.

For context, at the time of writing, the S&P/ASX 200 Index (ASX: XJO) is 0.75% higher year to date and 11% higher than 12 months ago.

Some investors might be put off by Telstra’s near-high share price, but I still see it as a great opportunity to buy into a high-quality ASX dividend stock at a good price.

Here’s why. 

Telstra is a strong and reliable business

Telstra is a classic defensive stock. 

These days, internet access and mobile phone connectivity are basic daily necessities rather than luxuries.

That means that regardless of how high inflation or the cost of living gets, or how severe global uncertainty becomes, the company’s offerings will remain a high priority for Australians. 

In other words, the ASX dividend stock is likely to perform steadily regardless of the stage of the economic cycle. 

Take Telstra’s  latest first-half FY26 update, for example.

In February, the telco posted that group underlying EBITDA had risen across all major business lines. Its mobile services revenue was 5.6% higher and group cash EBIT was 14% higher, for the six-month period. Underlying operating expenses were also reduced by 2.4%.  

The results show that the company has a predictable cash flow and reliable earnings. This is classic for a strong ASX defensive share. 

And this is great news for investors who want to hedge against potential volatility elsewhere in the index.

It pays a reliable and growing passive income to its shareholders

Because of its defensive, natural, and reliable earnings, Telstra can pay investors a reliable passive income with a good dividend yield.

The company historically pays its shareholders two dividends every year, in March and September. Investors were paid an interim 10.5 cent dividend, 90.48% franked, in March. 

The telco is expected to pay a total dividend of 20 cents for FY26, representing a 5.25% year-on-year increase. At the time of writing that implies a dividend yield around 3.8%

For FY27 the dividend payout is expected to increase again to 21 cents per share. 

Analysts are tipping much more upside to come for the ASX dividend stock

Even after this year’s share price rally, brokers rate Telstra shares as a buy. Market Index data, however, shows that the average $5.30 target price currently implies a 1.5% downside for the ASX dividend stock. 

The post 1 ASX dividend stock up 20% that I’d hold through any market appeared first on The Motley Fool Australia.

More reading

• 3 reasons I’d buy Telstra shares today
• Where I’d invest $5,000 in ASX blue-chip shares
• Stagflation: How to position an ASX stock portfolio
• Why I don’t own Telstra shares (yet)
• How to build a second income from ASX shares without taking big risks

Motley Fool contributor Samantha Menzies 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.