Here's the new Telstra dividend forecast through to 2026

Here's what analysts are forecasting for the telco giant's dividend.

| More on:
A smartly-dressed businesswoman walks outside while making a trade on her mobile phone.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

There are a lot of options for income investors to choose from on the Australian share market.

One of the most popular options out there is Telstra Group Ltd (ASX: TLS).

The telco giant features in countless portfolios and super funds across the country. This is thanks largely to its defensive earnings and the Telstra board's decision to regularly share a good portion of these profits with its shareholders each year in the form of dividends.

For example, in FY 2023 Telstra's solid financial performance enabled the board to resolve to pay dividends of 17 cents per share, returning $2 billion to shareholders.

But what is next for the Telstra dividend?

Telstra recently released an update on its guidance for FY 2024 and FY 2025.

In respect to the former, Telstra has reaffirmed its earnings guidance for FY 2024. It continues to expect underlying EBITDA in the range of $8.2 billion to $8.3 billion.

However, it introduced guidance for FY 2025 which was short of expectations. Telstra is guiding to underlying EBITDA of $8.4 billion to $8.7 billion. A key driver of this growth will be a $350 million cost reduction plan.

Commenting on next year's guidance, Goldman Sachs said:

Overall mid-point of guidance of $8.55bn is disappointing given we previously noted our views that $8.6bn was very achievable. Although the differences vs. GSe are not clear, it potentially relates to: (1) Timing of Enterprise restructure; or (2) Lower than CPI postpaid mobile pricing.

In light of this, it may not come as a surprise to learn that this guidance has implications for the Telstra dividend.

Dividend forecast through to 2027

According to a note out of Goldman Sachs, its analysts have downgraded their estimates for the Telstra dividend.

For FY 2024, the broker continues to expect a fully franked 18 cents per share dividend. This represents a 5.1% dividend yield based on the current Telstra share price of $3.53.

However, in FY 2025, Goldman now only expects a half cent increase to 18.5 cents per share. This is down from its previous estimate of 19 cents per share. Though, Goldman's new dividend estimate still equates to an above-average dividend yield of 5.25%.

Looking ahead, it is a similar story in FY 2026, with Goldman now pencilling in a 19.5 cents per share fully franked dividend for that financial year. This is down from its previous estimate of 20 cents per share.

But once again, an attractive dividend yield would be on offer with Telstra's shares if this dividend estimate is accurate. Based on its current share price, 19.5 cents per share equates to a 5.5% yield.

Should you invest?

Goldman may have been disappointed with Telstra's update, but it still sees a lot of value in its shares.

It currently has a buy rating and $4.25 price target on them, which implies potential upside of 20% for investors over the next 12 months.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. 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.

More on Dividend Investing

Five happy young friends on the coast, dabbing and raising their arms in the air.
Dividend Investing

Tax-busters: 5 fully-franked ASX dividend shares I'd buy for FY25

Fully-franked dividends can save you paying some tax this year...

Read more »

Broker looking at the share price on her laptop with green and red points in the background.
Dividend Investing

Brokers name 3 ASX dividend shares to buy

Income investors might want to check out these companies.

Read more »

two men smiling with a laptop in front of them, symbolising a rising share price.
Dividend Investing

2 ASX shares with shareholder-friendly policies

Meet these two ASX dividend shares with excellent track records.

Read more »

Stethoscope with a piggy bank and hundred dollar notes.
Dividend Investing

Medibank shares: Here's the dividend yield you'll get today

Medibank stock offers a decent dividend yield today.

Read more »

A man clasps his hands together while he looks upwards and sideways pondering how the Betashares Nasdaq 100 ETF performed in the 2022 financial year
Dividend Investing

Does DroneShield stock pay dividends?

Dividends would be the cherry on top for DroneShield's lucky investors.

Read more »

A smartly-dressed businesswoman walks outside while making a trade on her mobile phone.
Dividend Investing

Why Telstra and these excellent ASX dividend stocks could be buys

Analysts have put buy ratings on these income stocks. Here's what sort of yields they are forecasting.

Read more »

Three coal miners smiling while underground
Dividend Investing

Is the 11% dividend yield from Yancoal shares too good to be true?

Can you ever rely on an 11% dividend yield?

Read more »

A young male builder with his arms crossed leans against a brick wall and smiles at the camera as the Brickworks share price climbs today
Dividend Investing

This ASX 200 share has grown (or maintained) its dividend every year for almost 50 years!

This stock has been building its dividend for decades.

Read more »