Owning Telstra Group Ltd (ASX: TLS) shares for dividends could be one of the smarter moves by income-focused investors looking at blue-chip shares.
There are plenty of businesses within the S&P/ASX 200 Index (ASX: XJO), but few offer as large a dividend as Telstra while also delivering payout growth.
The last few years have seen a regular, rising payout by the business and I expect this to continue in the coming years.
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$30,000 investment in Telstra shares
I wouldn't recommend that investors put all of their money into one business – having a diversified approach is a good idea.
But, I'd be more comfortable putting $30,000 into Telstra than ASX bank shares and ASX mining shares.
In terms of the passive income, in FY25, Telstra decided to pay an annual dividend per share of 19 cents. That represented a 5.6% year-over-year increase. At the current Telstra share price, that represents a dividend yield of 3.9% and a grossed-up dividend yield of 5.6%, including franking credits.
If someone owned $30,000 of Telstra shares, that would translate into an annual cash of $1,170, or $1,671 including the bonus of franking credits, based on the FY25 payout.
However, the payments from the 2025 financial year are history. The future dividends could be even bigger.
The forecast on CMC Markets suggests the business could deliver an annual dividend per share of 20 cents in FY26, implying a possible rise of more than 5% year over year in the current financial year.
If that's what happens over the next 12 months, the investor with $30,000 in Telstra shares would receive $1,231 of a cash dividend and $1,759 of grossed-up dividend income, including the franking credits.
Why is the telco likely to grow its payout?
Telstra is the leading telecommunications business in Australia and it has built a reputation for having the best network.
This has given the business the ability to raise prices without much detrimental effect, helping boost the mobile division's average revenue per user (ARPU) each year in recent years.
The attractiveness of the mobile network has also meant the business has been able to attract additional customers every year (including the wholesale customers that use the Telstra network through different brands).
I'm also hopeful that the business can win more wireless broadband customers because this should mean the company can deliver a higher profit margin on that customer, rather than losing a significant portion of it to the NBN.
At the current Telstra share price, it's trading at 24x FY26's estimated earnings, according to the forecast on Commsec. I think that's a reasonable price to pay for a business with a good earnings outlook, given how Australia is becoming more technological.
