I think Telstra Group Ltd (ASX: TLS) shares are one of the best options for passive income right now because of its defensive earnings and the steady rise of its payout.
The business had a solid 2025 financial year, which saw the company report underlying figures of 0.7% total income growth, 3.2% earnings per share (EPS) growth to 19.1 cents and dividend per share growth of 5.6% to 19 cents. Impressively, cash EPS climbed by 12% to 22.4 cents.
The key division, as always, was mobile, which saw a 3% increase of income to $11 billion and 5% rise of operating profit (EBITDA) to $5.3 billion. Mobile handheld users rose 0.6%, while handheld average revenue per user increased 2.1% year over year.
Telstra shareholders were probably very happy to see that the business delivered inflation-beating dividend growth in the 2025 financial year. Now it's time to look at what the FY26 payout could be and how much cash that would be with a $10,000 investment.
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Expected dividend payout
The forecast on CMC Markets suggests the business could grow its annual dividend per Telstra share to 20 cents. That would represent a year-over-year increase of 5.25% for investors.
At the time of writing, that potential future payout translates into a grossed-up dividend yield of 5.7%, including franking credits. That may not be the biggest dividend yield around, but it's coming from a defensive business which is potentially hiking the income at a pleasing pace.
If someone were to invest $10,000 in Telstra shares, that would unlock around $570 of grossed-up dividend income for investors, which would be approximately $400 of a cash dividend and another $170 of franking credits.
Of course, that would just be year one for investors. The forecast on CMC Markets suggests the business could grow its annual dividend per share again to 21 cents per share in 2027.
Is this a good time to invest in Telstra shares?
I like investing in growing businesses, and Telstra is certainly growing thanks to its rising number of mobile subscribers and the growing average revenue per user. Thanks to operating leverage, the business is able to grow its profit margins as its revenue increases because the costs are being spread across more subscribers.
According to CMC Markets, there are currently four buy ratings on the business and five hold ratings.
So, whilst analysts aren't looking at the company as a big bargain, it could still be a solid opportunity for long-term passive income.
