Telstra Group Ltd (ASX: TLS) shares have been hovering near record highs since the start of April. At the time of writing they're trading around $5.34, just shy of a nine-year peak.
Telstra shares have experienced a solid run. The telco is up almost 10% year to date and 22% over the past 12 months. That comfortably outpaces the broader S&P/ASX 200 Index (ASX: XJO), which has gained 3% in 2026 and 15% over the same period.
So, has Telstra already done the heavy lifting, or is there still more upside ahead?
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Unmatched mobile scale
Start with the positives. Telstra remains Australia's dominant telecommunications provider, with unmatched scale across mobile networks and infrastructure. That leadership translates into real pricing power and the company is actively using it.
Recent price increases on mobile plans are a key driver. Thanks to relatively sticky customers, those higher prices are expected to flow through to both revenue and margins. In a high-cost environment, that ability to pass on increases is a major advantage.
Telstra also benefits from operating in a defensive sector. Connectivity is no longer discretionary. Whether economic conditions are strong or weak, consumers and businesses continue to pay for mobile and internet services. That makes the company a reliable option during periods of market volatility.
Longtime dividend favourite
Income is another major part of the appeal. Telstra shares have long been a favourite among dividend investors, supported by consistent cash flow and a mature operating model. Its payout ratio sits close to 100% of earnings, highlighting its focus on returning capital to shareholders.
The company pays two dividends annually. Its most recent interim dividend came in at 10.5 cents per share, largely franked, and management is guiding for a full-year dividend of 20 cents for FY26. That combination of yield and reliability continues to attract income-focused investors.
Slow steady expansion
But there are limits to the story of Telstra shares.
Telstra is not a high-growth business. As a mature operator, its earnings expansion tends to be gradual rather than explosive. Investors shouldn't expect rapid capital appreciation, this is more about steady compounding.
Competition also remains a constant pressure. Rivals continue to target market share across both mobile and broadband. While Telstra's network advantage is significant, it isn't unassailable. Any misstep could give competitors an opening.
There's also a ceiling to pricing power. Push prices too aggressively, and even loyal customers may start to reassess their options. Managing that balance will be critical.
So, what's the verdict?
Telstra shares have already delivered strong gains, and while the outlook remains stable, upside from here could be more modest. Most brokers currently sit on a hold rating, with an average price target of $5.26, slightly below the current share price.
That said, Macquarie Group Ltd (ASX: MQG) analysts take a more optimistic view. They rate Telstra as an outperform, expecting recent price increases to support both earnings and dividends. Their 12-month price target of $5.64 implies modest upside of around 5.5% and could bring the total earning, including a yield of roughly 3.7, to over 9%.
In short, Telstra remains what it has always been: a dependable, income-generating stock with defensive qualities. Just don't expect it to turn into a rocket ship anytime soon.
