Telstra Group Ltd (ASX: TLS) shares have had an interesting start to 2026.
After rallying around 18% to a 10-year high of $5.55 a piece in mid-May, the shares have cooled and fallen nearly 10% and are trading at around $5 at the time of writing.
It’s not all bad news though, Telstra shares are still higher than 12 months ago, at the time of writing.
It’s not all about share price gains and losses though, Telstra has plenty more to offer its shareholders.
What about Telstra’s passive income?
The telecommunications provider is a popular and reliable defensive ASX stock.
It makes sense that the company has a defensive nature. After all, internet access and mobile phone connectivity are a daily necessity these days, they’re not a luxury like they once were in the past.
That means the company’s services are in demand regardless of the state of inflation or the cost-of-living.
This means Telstra shares tend to perform steadily throughout all stages of the economic cycle, which is great news for investors who want to hedge against potential volatility elsewhere in the index, too.
Its defensive nature and steady performance means Telstra is able to pay its shareholders a reliable, and constant passive income stream. What’s more, its dividend payout ratio is close to 100% of its earnings which unlocks a great dividend yield.
Telstra traditionally makes two fully-franked dividend payments to shareholders every year, payable in March and September. For FY25 the company paid investors an annual dividend of 19 cents per share.
Earlier this year, Telstra announced that its first-half FY26 group underlying EBITDA had risen across all major business lines, mobile services revenue was 5.6% higher and group cash EBIT was 14% higher. Underlying operating expenses were also reduced by 2.4%.
And this meant the telco was able to hike its interim dividend by 5.25% for the first half of FY26, and pay its shareholders 10.5 cents per share, 90.48% franked, in March.
Telstra is forecast to pay a total 20 cent dividend per share in FY26, and then 21 cents in FY27.
At the time of writing, these forecasts translate to a forward dividend yield of around 3.9% for FY26, and just roughly 4.1% for FY27.
What’s next for Telstra shares?
Analysts are unanimously neutral about the outlook for Telstra shares over the next year.
TradingView data shows all 12 analysts have a hold rating on the telco, but the average $5.25 target price still implies a potential 3% upside ahead.
The post Should I buy Telstra shares for passive income? appeared first on The Motley Fool Australia.
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More reading
- How to invest in ASX shares when you can’t find stocks to buy
- Here are my 5 best ASX passive income stocks
- 5 years ago, $10,000 bought 2,801 Telstra shares. But how many would it buy now?
- Which is better: A 4% dividend yield or a 5% term deposit?
- How much is needed in superannuation to target an $8,000 monthly passive income?
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.