Telstra Group Ltd (ASX: TLS) shares could be among the most attractive investments for passive income within the S&P/ASX 200 Index (ASX: XJO).
The combination of good dividend yield and rising payouts could be exactly what passive income investors are looking for.
If an investor were to buy $20,000 of Telstra shares this week, they could give themselves a lot of extra dividends for their life expenditure (or have more cash flow to fund investments).
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Big dividends incoming?
Telstra has had a reputation as an ASX dividend share for a long time, but not necessarily one that regularly grows its dividend.
However, the company is now impressively hiking its dividend for investors.
In the 2025 financial year, the business decided to increase its payout by 5.6% to 19 cents per Telstra share.
Broker UBS is expecting consecutive dividend rises in the coming years. In FY26, it could pay an annual dividend per Telstra share of 21 cents. At the time of writing, that translates into a grossed-up dividend yield of 6.2%, including franking credits.
If someone were to invest $20,000 and get that yield, this would be $1,240 of annual passive income.
But, excitingly, UBS predicts that Telstra's dividend per share could rise to 22 cents in FY27, 24 cents in FY28, 27 cents in FY29 and 30 cents in FY30.
This would mean investing $20,000 today could eventually see the business pay $1,774 of passive income.
Is this a good time to invest in Telstra shares?
UBS expects Telstra to continue raising prices for postpaid mobile users, though it also expects some users to trade down. The broker is forecasting a 4.5% price rise, or $3 per month, in postpaid in July 2026, which is expected to drive a 2.5% increase in postpaid average revenue per user growth in FY27.
However, the broker is expecting Telstra to lose a little bit of market share.
UBS also notes that Telstra was the first to incur satellite direct-to-handset costs since rolling out satellite messaging to consumers in June 2025, recently expanding that to enterprise customers.
The broker also made some comments on the potential fallout of some of Telstra's peers' 000 outages:
Further, the Australian government is looking to potentially legislate a Universal Outdoor Mobile Obligation (UOMO) post recent 000 outages, which would require mobile carriers to partner with LEOSats to provide mobile voice and text outdoors everywhere in Australia.
UBS has a neutral rating on Telstra shares, with a price target of $4.90. That implies little movement from where it is today, so there could be better ASX shares out there for passive income.
