Owning Telstra Group Ltd (ASX: TLS) shares has been a rewarding choice for passive income over the last few years. Its rising payouts have unlocked a growing dividend yield for shareholders.
With how the ASX telco share has drifted 13% lower from May 2026, prospective investors are now being offered a lot of potential income.
When a share price falls, it increases the dividend yield at the same rate. For example, if a business had a 5% dividend yield and the share price falls 10%, the yield becomes 5.5%. A similar sort of effect has happened with Telstra this year.
A rising dividend
While the market may not be as optimistic about the business as it was earlier this year, the dividend payments continue to grow, which I think implies the board of directors remains positive about the future and its financials.
In the FY26 result, Telstra’s board of directors decided to hike its annual dividend per share by 10.5% to 21 cents. That translates into a dividend yield of 4.4% excluding franking credits and approximately 6% including franking credits.
However, I’d say the FY26 dividend is now old news and we should look ahead to the FY27 dividend because we’re already a couple of months into the 2027 financial year.
According to the projection on CMC Invest, the business could grow its annual dividend per share by another 4.75% in FY27. This would mean Telstra could provide a dividend yield of 4.6% excluding franking credits and approximately 6.25% including franking credits in FY27.
Is the Telstra share price a buy?
I wouldn’t necessarily invest in an ASX share just for the passive income. But, if dividends are a primary focus, then Telstra shares could be a solid option.
In FY26, the company grew cash operating profit (EBIT) by 8% to $4.7 billion, underlying net profit rose 4.9% to $2.5 billion and cash earnings per share (EPS) jumped 14% to 25.5 cents.
With how the company has already invested heavily in its 5G network, I think the business’ cash earnings can continue rising at a pleasing pace, funding bigger dividends.
Its mobile earnings continue to rise. FY26 mobile income grew 3% to $11.4 billion and mobile operating profit (EBITDA) grew 3% to $5.4 billion. It saw both mobile users and average revenue per user (ARPU) increase.
I think the company’s earnings can rise again in FY27 thanks to mobile price increases.
I reckon the Telstra share price is attractive for passive income and potential long-term capital growth as Australia becomes increasingly digital.
The post Is the Telstra share price a buy for its 6.25% dividend yield? appeared first on The Motley Fool Australia.
Should you invest $1,000 in Telstra Group right now?
Before you buy Telstra Group 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 Group 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 1 August 2026
.custom-cta-button p {
margin-bottom: 0 !important;
}
More reading
- What happens if the ASX share market crashes just after I retire?
- How much passive income could a $500,000 superannuation balance generate?
- How much do I need in my superannuation to earn $10,000 passive income every month?
- Post-earnings: I’d buy these ASX dividend stocks for income today
- How I’d target $5,000 a year in passive income from ASX shares
Motley Fool contributor Tristan Harrison 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.