Owners of Telstra Group Ltd (ASX: TLS) shares have been rewarded with a high level of dividends in the last few years. Investors may be hoping for even stronger payouts in the coming results.
The ASX telecommunications share has invested heavily in its 5G network in the last few years to ensure that it maintains a very healthy market leadership. This allows it to generate a pleasing level of revenue from each customer.
Despite that level of spending on its infrastructure, the business has been able to maintain a very high dividend payout ratio, unlocking a pleasing dividend yield.
Let's take a look at what the broker UBS is forecasting for Telstra's dividends.
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FY25
Telstra's 2025 financial year has finished, though we won't know what numbers the business has achieved until it reports its result in August.
The broker UBS is predicting that in FY25, the business generated $23.9 of revenue, $4 billion of operating profit (EBIT) and $22.8 billion of net profit after tax (NPAT). That would translate into earnings per share (EPS) of approximately 20 cents.
With that profitability, UBS is predicting the Telstra annual dividend could increase to 19 cents per share. This would translate into a fully franked dividend yield of 3.9% and a grossed-up dividend yield of 5.6%, including franking credits.
FY26
The 2026 financial year could get even better for the company.
At its Connected Future 30 strategy day, Telstra highlighted growing demand, its competitive advantages and execution track record. It is also investing in AI and aiming to lift its return on invested capital (ROIC). Plus, Telstra recently announced a monthly price rise of a few dollars per month from July 2025, which should boost the average revenue per user (ARPU), according to UBS.
UBS is predicting that Telstra could pay an annual dividend per share of 21 cents in FY26. This would translate into a grossed-up Telstra dividend yield of 6.2%, including franking credits.
FY27
UBS thinks Telstra can exceed the telco's stated ROIC goal of 10% by FY30. The broker thinks Telstra could reach 12% or 13%.
The broker noted while depreciation and amortisation, and spectrum costs in FY27 and FY28 could impact ROIC over the next five years, AI could help reduce costs and improve productivity.
The broker believes Telstra could decide to pay an annual dividend per share of 22 cents in FY27. This would be a grossed-up dividend yield of 6.5%.
FY28
In the 2028 financial year, the broker is thinking that both Telstra's profit and dividend could jump again.
UBS is currently predicting Telstra's board of directors could decide on a dividend per share of 25 cents in FY28. That would translate into a grossed-up dividend yield of 7.4%, including franking credits.
FY29
The 2029 financial year could be the best year for Telstra dividends throughout this period of projections.
The telco business could pay an annual dividend per share of 27 cents in FY29. If that happens, that would translate into a grossed-up dividend yield of 8%, including franking credits. I think that would be a great dividend yield for income-focused investors.
