Telstra Corporation Ltd (ASX: TLS) shares have been a staple of the ASX dividend investors' portfolio for decades now. This blue chip telco of the S&P/ASX 200 Index (ASX: XJO) has a long history of paying out large and fully franked dividend payments to shareholders.
But the Telstra share price has not been as kind to investors in recent years. Today, the telco's shares are going for $3.95 each at the time of writing. That's basically the same price that investors could have bought in for back in mid-2017. In fact, the Telstra share price has gone backwards by 3.4% over the past five years. The telco is also down almost 6% in 2022 thus far.
So are Telstra shares still worth buying for dividend income today?
Well, let's check out what kind of dividend yield one could expect from the company today. So Telstra has consistently paid out an annual total of 16 cents per share in fully franked dividends every year since 2019. Its most recent dividend was the interim payment of 8 cents per share that investors received back on 1 April.
So as Telstra has paid out 16 cents in dividends per share over the past 12 months, its shares currently have a trailing dividend yield of 4.04% on the current pricing. That grosses up to 5.77% with the value of those full franking credits.
Are Telstra shares a buy for dividend income?
A yield of 4.04% is objectively solid, although it's not as high as many other ASX blue chip shares. For example, three out of the four major ASX banks offer higher trailing dividend yields than Telstra today. As do mining giants like Rio Tinto Limited (ASX: RIO) and BHP Group Ltd (ASX: BHP).
However, Telstra's current dividend yield is still higher than many other ASX blue chip shares. These include Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL), Wesfarmers Ltd (ASX: WES) and Transurban Group (ASX: TCL).
But still, income investors could arguably do worse than Telstra shares today. But perhaps it is the telco's share price itself that offers the most potential return for investors. As my Fool colleague Tristan covered last week, two ASX brokers have buy ratings on the telco right now. They are Ord Minnet and Morgan Stanley.
Ord Minnet currently has a 12-month share price target of $4.65 on Telstra shares. Morgan Stanley has a similar view, with a target of $4.60. These targets represent a potential upside of 17% and 16% respectively from where the company's shares sit today. Also worth noting is how both brokers anticipate a continuation of Telstra's 16 cents per share dividend into FY2023.
So if these brokers are to be believed, Telstra is a buy today for both healthy dividend income and the possibility of significant share price gains over the coming year. No doubt that will be music to the ears of shareholders. But we shall just have to wait and see what happens to be sure.
At the current Telstra share price, this ASX 200 telco has a market capitalisation of $45.6 billion.
