Commonwealth Bank of Australia (ASX: CBA) is certainly one of the strongest businesses in Australia. However, there are a few ASX blue-chip stocks that I'd rate as much more appealing buys. I'm going to highlight one in particular – the ASX telco share Telstra Group Ltd (ASX: TLS).
Both ASX stocks are leaders in their respective industries, but Telstra's offering as an investment seems more compelling to me.
It's impressive that a relatively large number of CBA's loans come through its own channels, rather than a mortgage broker. However, there is still a lot of competition in the banking space. Other banks like Macquarie Group Ltd (ASX: MQG), Westpac Banking Corp (ASX: WBC), and National Australia Bank Ltd (ASX: NAB) can compete on price and offer the same loan features as CBA.
Telstra's mobile network is seen as superior to the other networks, with more coverage and more reliability. The ASX stock is able to charge more for each subscriber than its competitors and still achieve rising subscriber numbers over the long term.
There are a couple of key factors that make Telstra shares much more appealing to me.
Profit growth
Telstra's net profit could grow at a significantly faster pace than CBA's net profit over the coming years.
Ultimately, it's profit growth that drives a share price higher, so the outlook for Telstra makes me believe the telco is more likely to outperform CBA shares. I think that profit growth is likely, due to Telstra's growing revenue, its operating leverage, and its potential to capture home broadband customers through wireless (5G) connections in the future.
According to the broker UBS, Telstra is predicted to generate $2.47 billion of net profit in FY26 and steadily rise to $3.47 billion by FY30. That translates into a potential rise of around 40% between FY26 and FY30 for the ASX stock.
Meanwhile, UBS predicts that CBA could generate $10.75 billion of net profit in FY26 and then grow that net profit to $12.4 billion by FY30. Those projections suggest that the ASX bank stock could deliver 15% net profit over that same time period. In other words, Telstra is expected to grow its profit at more than double the pace over the next few years.
Larger dividend yield
Profit growth is one thing, but investors may also be searching for pleasing dividend income from the investment.
Looking at the latest annual dividend payouts, Telstra has a trailing grossed-up dividend yield of 5.6% (including franking credits) at the time of writing.
Meanwhile, CBA shares only have a trailing grossed-up dividend yield of 4.1% (including franking credits) at the time of writing. That's a sizeable difference – Telstra seems like the clear pick for passive income.
Of the two major ASX blue-chip shares, I know which one I'd rather buy this month.
