6% potential yield? Here's the Telstra share price and dividend forecast

Can the telco deliver strong returns?

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The Telstra Group Ltd (ASX: TLS) share price has risen by more than 20% in the past year, as the chart below shows. It's worthwhile considering what the ASX telco share could deliver in the next 12 months.

In the last few months, investors have seemingly appreciated how much net profit growth the company could deliver in the next 12 months and in the coming few years.

Telstra is seeing useful tailwinds for its profitability including a growing user base and a rising average revenue per user (ARPU).

The company is on a good course and we'll take a look at what experts are predicting for the business.

Dividend forecast

The broker UBS is predicting that Telstra's dividend could be 19 cents per share in FY25, and could rise to 21 cents per share in FY26.

At the current Telstra share price, it could translate into a FY26 fully franked dividend yield of 4.25% and a grossed-up dividend yield of 6%, including franking credits.

Pleasingly, UBS is predicting the dividend per share could increase to 22 cents in FY27, 25 cents in FY28 and 27 cents in FY29.

That means, by FY29, it could translate into a grossed-up dividend yield of 7.8%, including franking credits.

Telstra share price growth forecast

UBS currently has a neutral rating on the company, with a price target of $4.60. A price target is where analysts think the share price will be in 12 months from now. Therefore, UBS is currently suggesting the Telstra share price could decline by 7% from its current level.

Of course, it's worth noting that the target price is significantly higher than where the Telstra share price was at the start of the year.

However, there are plenty of brokers that are more optimistic on the company's potential.

According to Commsec's collation of analyst recommendations, there are currently 12 buy ratings two hold ratings and two sell ratings.

While UBS may be neutral on the business, the broker is expecting Telstra's net profit to increase by 44% from $2.28 billion in FY25 to $3.29 billion in FY29. There are not many blue-chips capable of producing that level of profit growth over the next few years.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. 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.

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