The Australian share market is a great place to generate passive income.
That's because plenty of ASX stocks share a portion of their earnings with their shareholders every six months in the form of dividends.
So, if you're lucky enough to have $15,000 sitting idle, then it could be worth putting it to work for you in the share market.
After all, by buying the ASX dividend stock in this article, you could be pulling in almost $750 of passive income, as well as potentially seeing your original investment increase in value.
Which ASX dividend stock?
The stock in question is Telstra Group Ltd (ASX: TLS).
It is of course Australia's leading telecommunications and technology company, offering a full range of communications services and competing in all telecommunications markets. At the last count, in Australia it was providing approximately 22.5 million retail mobile services and 3.4 million retail bundle and data services.
Goldman Sachs remains very positive on the ASX dividend stock and believes it would be a great option for investors right now.
The broker has a buy rating and $4.35 price target on the telco giant's shares, which implies potential upside of 12.4% for investors over the next 12 months.
This means that if Goldman is on the money with its recommendation, your $15,000 investment would be worth $16,860.
And let's not forget the passive income that this ASX dividend stock is predicted to provide.
Passive income boost
Goldman Sachs is forecasting Telstra to pay fully franked dividends of 19 cents per share in FY 2025 and then 20 cents per share in FY 2026.
Based on the current Telstra share price of $3.87, this will mean dividend yields of 4.9% and 5.15%, respectively.
This means that income investors could expect to receive passive income of $735 in FY 2025 and then $772.50 in FY 2026 from a $15,000 investment today.
But why is it a buy? Goldman likes Telstra's low risk earnings and dividend growth. It said:
We believe the low risk earnings (and dividend) growth that Telstra is delivering across FY22-25, underpinned through its mobile business, is attractive. We also believe that Telstra has a meaningful medium term opportunity to crystallise value through commencing the process to monetize its InfraCo Fixed assets – which we estimate could be worth between A$22-33bn. Although there is some debate around the strategic benefits, we see a strong rationale for monetizing the recurring NBN payment stream, given its inflation linked, long duration cash flows could be worth $14.5bn to $17.9bn, with no loss of strategic benefit.
