The S&P/ASX 200 Index (ASX: XJO) stock Telstra Group Ltd (ASX: TLS) is one of the leading blue-chip shares for passive income.
When I look for dividends, I want to see a few different factors. For example, I want to see a good dividend yield, payout growth potential, and stability. I think Telstra ticks all three boxes and can help investors earn $200 in monthly income.
Let's run through why Telstra stock is so appealing.
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Dividend yield
The business already offers a pleasing level of passive income for shareholders.
Telstra delivered shareholders 10.5 cents per share in the FY26 half-year result. If it repeats that dividend with the FY26 result, then the current FY26 yield is 3.9% excluding franking credits, and more than 5.5% including franking credits.
While that's not the biggest dividend yield on the ASX, I think it's important to remember that Telstra offers other pleasing passive income aspects.
Payout growth potential
Compounding is a powerful force that can make a financial figure today much larger in five or ten years, as long as the growth rate is solid.
There are not many ASX 200 stocks with a dividend yield above 5% that are likely to grow their dividend payout by at least 10% in FY26, in my view.
Telstra grew its FY26 half-year dividend by 10.5%, and I think it's likely to grow its annual dividend by 10.5%.
It has grown its annual dividend each year since the growth streak started in 2022.
I believe Telstra's dividend growth can continue because it's delivering revenue growth through subscriber growth and price rises (helping the average revenue per user (ARPU)).
Additionally, its earnings are growing at a stronger pace (funding good dividend growth) thanks to operating leverage, partly because the costs of its mobile network are being spread across more users.
Dividend stability
An ASX 200 dividend stock is not much use for passive income if its payouts dry up during a downturn, in my view. That's when we need the cash payments to flow the most!
I'd say telecommunications (including an internet connection) is a very important service for households and businesses for a variety of purposes, so Telstra's earnings are very defensive in my view.
$200 of monthly passive income
Telstra doesn't pay a dividend every single month, but it does pay every six months.
With that, we can think of the monthly goal as an annual target and then divide that by 12.
To target $200 per month, we're talking about $2,400 per year. To receive that annual goal, we'd probably need 11,429 Telstra shares.
I think the ASX 200 stock is a great option for passive income, but it's close to its 52-week high, so it's not the first business I'd buy today because it's not at the greatest value.
