Telstra Group Ltd (ASX: TLS) shares are a popular option for income investors.
Historically, the telco giant has been one of the biggest dividend payers on the Australian share market.
And while its dividends took a hit during the 2010s with the arrival of the NBN, they recently returned to growth.
But will this trend continue or is this just a false dawn for income investors? Let's find out what the market is expecting.
Telstra dividend forecast
The good news for investors is that the market believes it is onwards and upwards for the company's dividend in the coming years.
As a reminder, Telstra increased its fully franked dividend to 17.5 cents per share in FY 2023.
Looking ahead, Goldman Sachs is forecasting an increase to 18 cents per share this financial year. Based on the current Telstra share price of $3.79, this will mean a 4.75% dividend yield.
The increases are expected to continue in FY 2025, with Goldman expecting the telco to reward its shareholders with a 19 cents per share dividend. This represents a very attractive 5% dividend yield based on current prices.
Finally, in FY 2026, another increase is expected from analysts at Goldman Sachs. The broker has pencilled in a 20 cents per share dividend from Telstra. If this proves accurate, it will mean a generous 5.3% dividend yield for income investors.
In summary, Goldman expects:
- FY 2024 – 18 cents per share
- FY 2025 – 19 cents per share
- FY 2026 – 20 cents per share
Are Telstra shares a buy?
As well as forecasting dividend increases, Goldman Sachs believes that Telstra shares can increase in meaningfully in value.
The broker currently has a buy rating and $4.55 price target on its shares. This implies potential upside of 20% for investors.
And if we include the forecast dividends over the next 12 months, a total return of approximately 25% could be on the cards for investors buying at today's price.
