The Telstra Group Ltd (ASX: TLS) share price has risen an impressive 24% in the last six months, as the chart below shows. When a share price rises significantly in a short amount of time, the valuation may be less attractive. I still think Telstra is an appealing business to invest in.
Telstra is a leader of telecommunications in Australia, but I wouldn't buy it just because of that. If a sector leader doesn't have a strong economic moat and/or invest to stay ahead, then it could lose its lead.
With that in mind, I think Telstra could be a strong performer from here in the coming years.
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Connected Future 30
Towards the end of May 2025, the business announced its Connected Future 30. The company wants to ensure it operates Australia's leading mobile network. With that in mind, it has created a 'network experience index' based on the network availability and speed experienced by mobile and fixed customers. It wants to lift this index by one point each year to FY30.
The business also wants to be Australia's leading digital infrastructure provider.
By building and investing in its 5G network, the business can stay ahead of competitors. For me, the network leadership is the key factor for the company's success because that allows the business to capture value from its network.
The company also plans to be within the top 25% of global enterprises in AI maturity by FY30, which could help its customer service, its efficiencies and profitability.
Strong subscriber performance is helping the Telstra share price
The network leadership of the business in the sector is helping the business both attract new customers and charge existing more, boosting its average revenue per user (ARPU).
In the six months to 31 December 2024, the business saw its mobile subscriber numbers increase by 119,000 compared to the six months to June 2024.
The company also recently announced that it's increasing prices for some mobile subscribers, which should help profit margins and the bottom line. Investors usually value the business based on its net profit potential.
According to forecasts from UBS, Telstra's net profit is predicted to increase by 10% in FY26 and then increase 31% between FY26 to FY29. It's currently trading at 22.5x FY26's estimated earnings.
I think Telstra's share price is attractive with the profit growth outlook it has. But, there's more to the returns from the business than just capital growth.
Pleasing dividend
Dividend payments play an important part in the overall return and the business has recently been increasing its annual dividend.
The defensive earnings of the business allow it to pay a reliable and growing dividend for investors.
UBS predicts that Telstra could pay a dividend per share of 21 cents in FY26. That translates into a forward grossed-up dividend yield of 6%, including franking credits. That's a very attractive level of passive income, in my view.
