Buy Telstra and these ASX dividend shares for passive income

These shares could be good picks for income investors.

| More on:
Person holding Australian dollar notes, symbolising dividends.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Adairs could be positioned for a strong 6.8% dividend yield due to improved financial stability and performance in homewares retail.
  • BHP is expected to maintain robust dividends with a 3.9% yield in FY 2026, supported by its world-class mining assets and consistent cash flow.
  • Telstra plans to gradually increase dividends through its Connected Future 30 strategy, supported by its expanding 5G network and stable earnings, aiming for a 4.1% yield in FY 2026.

For investors chasing reliable passive income, the Australian share market remains one of the best places in the world to look.

Plenty of homegrown ASX shares deliver consistent earnings, strong cash flow, and fully franked dividends.

If you are looking to build or top up an income-focused portfolio, here are five ASX dividend shares that could be worth considering:

Adairs Ltd (ASX: ADH)

Adairs is one of Australia's leading homewares retailers. It has returned to form recently following a difficult retail cycle. With improved inventory management, stronger online performance and cost efficiencies flowing through, the business now sits in a healthier financial position. As consumer sentiment gradually improves, Adairs' margin profile and cash generation should benefit, supporting its fully franked dividend. It currently trades with an estimated forward dividend yield of 6.8%.

BHP Group Ltd (ASX: BHP)

BHP is one of the most dependable dividend payers on the ASX. Its world-class mining assets generate enormous free cash flow through the cycle, allowing the company to continue rewarding shareholders even when commodity prices soften. Analysts expect BHP to maintain strong fully franked distributions over the coming years thanks to its low-cost operations and robust balance sheet. For example, the consensus estimate is for a 3.9% dividend yield in FY 2026.

Coles Group Ltd (ASX: COL)

Another ASX dividend share to look at is Coles. It is a favourite among defensive income investors, and for good reason. This supermarket giant generates consistent earnings through all economic conditions, supported by steady demand for essential goods. In addition, its focus on automation, cost efficiencies, and private-label expansion is helping push margins higher, which bodes well for its future dividends. The market is expecting a fully franked 3.5% dividend yield this year.

Dicker Data Ltd (ASX: DDR)

Dicker Data is an IT hardware and software distributor with a long track record of steady revenue growth, resilient margins, and rising dividends. Its relationships with top-tier technology vendors, along with its focus on recurring product demand, have helped support consistent cash flow. As digital infrastructure spending remains strong across the corporate sector, Dicker Data is positioned to continue rewarding shareholders with fully franked dividends. It currently trades with an estimated forward dividend yield of 4.6%.

Telstra Group Ltd (ASX: TLS)

Finally, Telstra could be a core holding for income-focused investors. With strong demand for mobile services, expanding 5G adoption, and ongoing improvements to network efficiency, Telstra continues to deliver stable earnings. Management has outlined plans to lift dividends gradually through its Connected Future 30 strategy, supported by recurring cash flow from mobile, enterprise and infrastructure businesses. This is expected to underpin a 4.1% fully franked dividend yield in FY 2026.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Adairs. The Motley Fool Australia has positions in and has recommended Adairs, Dicker Data, and Telstra Group. The Motley Fool Australia has recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Dividend Investing

Smiling woman with her head and arm on a desk holding $100 notes out, symbolising dividends.
Dividend Investing

This 9% yield is one I'm comfortable holding for the long term

This business has a history of paying large dividends.

Read more »

Man holding fifty Australian Dollar banknote in his hands, symbolising dividends, symbolising dividends.
Dividend Investing

An ASX dividend stalwart every Australian should consider buying

This business offers both a good yield and payout growth.

Read more »

Man holding out Australian dollar notes, symbolising dividends.
Dividend Investing

5 ASX dividend shares to buy for an income boost

Let's see why these shares could be top picks for income investors right now.

Read more »

Increasing stack of blue chips with a rising red arrow.
Blue Chip Shares

2 ASX blue-chip shares offering big dividend yields

I’m backing these two businesses as appealing dividend stocks.

Read more »

A happy, smiling man stretches out among yellow daisies in the green grass, dreaming of success.
Share Market News

How I'd invest monthly savings to generate over $50,000 passive income

This is how modest monthly investing could turn into serious passive income.

Read more »

Woman on a swing at a beach, symbolising passive income.
Dividend Investing

Passive income: How to earn safe dividends with just $20,000

The best dividend stocks tend to share these traits...

Read more »

Man holding out $50 and $100 notes in his hands, symbolising ex dividend.
Dividend Investing

Own VTS ETF? It's a great day for you!

This exchange-traded fund seeks to mirror the performance of the entire US stock market.

Read more »

A man looks at his laptop waiting in anticipation.
Dividend Investing

A 3.5% ASX dividend stock paying cash every month

Some monthly divided stocks are more equal than others.

Read more »