Telstra Group Ltd (ASX: TLS) shares closed flat yesterday, trading for $3.81 apiece.
That puts shares in the S&P/ASX 200 Index (ASX: XJO) telco down 2% over the past 12 months, slightly outperforming the 2.1% loss posted by the ASX 200 over this same period.
So, with that retrace in mind, are Telstra shares a good buy now for their dividend income?
Telstra shares for dividend income?
When I'm looking for passive income stocks, one of the metrics at the top of my list is reliability.
On that score, Telstra shares get a big tick, having delivered two fully franked dividends per year for more than a decade running. And that includes the market-addled pandemic year of 2020.
By the way, that's another important metric I look for with ASX 200 dividend stocks, franking credits. This will offer most investors some handy tax credits when it's time to pay the ATO its dues.
So that's two ticks for Telstra shares' dividend income potential.
Other important metrics to consider are the profitability of the business, and whether dividends have been growing or shrinking.
That played out well for passive income investors.
The telco paid a final, fully franked dividend of 8.5 cents per share on 28 September. The interim dividend of 8.5 cents per share landed in eligible investors' bank accounts on 31 March.
That works out to a full-year payout of 17 cents per share, an increase of 3% from FY 2022.
At yesterday's closing price, this equates to a fully franked trailing yield of 4.5%.
Of course, we're hoping to see some share price growth as well as dividend growth.
Following on the company's full-year earnings results, CEO Vicki Brady said the principle of Telstra's "capital management framework [is] to seek to grow our fully franked dividend over time".
On that front, Goldman Sachs has a bullish outlook on the ASX 200 telco.
The broker has a $4.70 price target on Telstra shares, representing a potential upside of 23% from current levels.
As for the passive income on offer, Goldman Sachs also sees that rising over the next two years. Its analysts are forecasting the telco's stock will deliver dividends of 18 cents per share in FY 2024, rising to 20 cents per share in FY 2025.
Goldman's bullish outlook stems from the "low risk earnings (and dividend) growth that Telstra is delivering across FY22-25".