Owners of Telstra Group Ltd (ASX: TLS) shares can be happy with the FY26 first-half result considering the ASX telco share delivered investors a pleasing amount of profit and dividend growth.
For the six months to 31 December 2025, Telstra reported that total income grew 0.2% to $11.8 billion, operating profit (EBIT) climbed 9.2% to $2 billion and earnings per share (EPS) grew 11.2% to 9.9 cents.
The cash measure of profitability saw even stronger growth, with cash EBIT rising 14% to $2.5 billion and cash EPS climbing 19.7% to 14 cents.
The dividend payment was increased by 10.5% to 10.5 cents per share, though it wasn't fully franked. Let's take a look at where analysts think the payout could go from here.
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FY26
After seeing the numbers, UBS said that the result continued to demonstrate the strength of its mobile division, which delivered 4% revenue and EBITDA growth. Cost control was another highlight for the business.
UBS said it remains "constructive on the growth outlook" for Telstra and is forecasting that cash EBIT can grow at a compound annual growth rate (CAGR) of 5% over the next four years, driven by capturing CPI inflation-linked mobile price rises and continued cost control through AI productivity savings. The broker expects this to support dividend growth in the years ahead.
The broker is expecting Telstra to deliver average revenue per user (ARPU) growth in FY26 and FY27, alongside "solid" subscriber net additions across postpaid, prepaid and wholesale users. This gave UBS "comfort on the sustainability of continued price rises across the various customer segments over the medium term."
UBS also thinks Telstra's profit margins can rise for the foreseeable future, with cost growth limited to a CAGR of 1.5% over the next four years. There are three reasons for that. First, up to 650 redundancies (1.5% of Telstra's workforce) were indicated by Telstra. Second, the benefits of the consolidation of software and IT providers. Third, a joint venture with Accenture to help with costs and deliver faster product-to-market times.
The broker predicts Telstra's EBITDA margin could expand by an average of 60 basis points between FY26 and FY30 with ongoing efficiencies as AI adoption increases.
UBS forecasts that the Telstra annual dividend per share could rise to 21 cents in FY26. That'd be a cash dividend yield of 4.1%, excluding any potential franking credits.
FY27
The payout is projected to increase in the 2027 financial year for owners of Telstra shares.
UBS suggests the ASX telco share could declare an annual dividend per share of 22 cents in the 2027 financial year.
FY28
The 2028 financial year could see yet another increased payout for investors.
UBS forecasts the business could decide on an annual dividend per share of 23 cents.
FY29
The 2029 financial year could see a big increase of the annual payout to 26 cents per share, according to the UBS forecast.
FY30
The 2030 financial year could see the biggest payout since FY17. UBS forecasts the business could pay an annual dividend per share of 29 cents. That's a potential cash yield of 5.7%, excluding franking credits. It would also represent an increase of 38% between FY26 and FY30.
