Telstra Group Ltd (ASX: TLS) shares have been on a tear.
Around the start of the Iran conflict, the telco quietly hit a new 52-week high, levels not seen since early 2017. Then it pushed even higher, reaching $5.44.
It has since cooled slightly to around $5.38 at the time of writing, but the gains are still impressive. Telstra shares are up more than 10% in 2026 and nearly 30% over the past 12 months.
That raises the obvious question: is there more upside ahead?
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Price hikes as key driver
Let's first have a look at the strengths. Telstra is Australia's dominant telecommunications provider, with unmatched scale in mobile and infrastructure. Its network leadership gives it pricing power, something it's actively using.
Telstra is a classic defensive play. Connectivity is now essential, so demand stays strong regardless of inflation or cost-of-living pressures.
Recent price hikes on mobile plans are a key catalyst.
Higher prices, combined with relatively sticky customers, should translate into stronger revenue and margins. In a world of rising costs, that's a powerful advantage.
Popular dividend share
There's also the income appeal. Telstra shares remain a favourite for dividend investors, supported by steady cash flow and a mature, defensive business model. In fact, its dividend payout ratio is close to 100% of its earnings.
Telstra pays investors two dividends per year. Last month, investors were paid an interim dividend of 10.5 cents, 90.48% franked. Telstra has forecast to pay a 20-cent dividend for FY26.
That combination of income and stability is attracting investors in volatile markets.
Incremental growth, fierce competition
But there are risks. Growth is still modest.
Telstra isn't a high-growth tech company, it's a mature business. That means upside for Telstra shares is often incremental rather than explosive.
Competition is another factor.
Rivals continue to challenge pricing and market share, particularly in mobile and broadband. Any misstep could quickly erode Telstra's edge.
And while price increases are positive for margins, there's always a limit. Push too far, and customers may start looking elsewhere.
So what do analysts think?
Analysts at Macquarie Group Ltd (ASX: MQG) are bullish. The broker has an outperform rating on Telstra shares and believes the recent price increases will support both earnings and dividends.
It has set a 12-month price target of $5.64, which points to a modest 5% upside at current price levels.
Foolish Takeaway
Telstra shares have already delivered strong gains, but the story isn't over.
With pricing power, reliable income, and defensive appeal, the telco still has room to climb. Just don't expect fireworks — this is a steady grinder, not a rocket.
