Telstra Group Ltd (ASX: TLS) shares have had a strong 12 months, rising around 18% to $5.36.
Based on CommSec consensus estimates, Telstra is expected to generate earnings per share of 19.8 cents in FY26 and 20 cents in FY27. That puts the shares on a fairly full-looking price-to-earnings ratio of 27.
Even so, I think there are still good reasons to consider buying Telstra shares in May, particularly for investors focused on income, reliability, and steady long-term returns.
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A dividend story that still looks attractive
The first reason I like Telstra is the dividend.
According to CommSec, the market expects dividends of 21 cents per share in FY26 and 21.5 cents per share in FY27. At the current share price, that implies forward dividend yields of around 3.9% and 4.0%.
That is not the highest yield on the ASX, but I think the quality of the income stream is important.
Telstra's most recent results showed the board declared a 10.5 cents per share interim dividend, up from 9.5 cents a year earlier, with the dividend 90.5% franked. Management said the dividend was supported by strong cash earnings and its aim remains to deliver a sustainable and growing dividend.
For income investors, I think that combination of yield, franking, and dividend growth potential is appealing.
The mobile business is still performing well
The second reason is the strength of Telstra's mobile business.
In the first half of FY26, Telstra said mobile EBITDA grew by $93 million, supported by higher average revenue per user and more customers choosing its network. Mobile services revenue increased 5.6%.
That is exactly the kind of performance I want to see from Telstra.
The mobile network is the heart of the investment case, in my opinion. Telstra has a strong brand, leading network coverage, and a customer base that appears willing to pay for quality and reliability.
This is not a business that needs explosive growth to work as an investment. If it can keep lifting mobile earnings, controlling costs, and supporting dividends, I think shareholders can do well over time.
Cost discipline and capital management
The third reason is the way Telstra is managing the business.
Its half-year results showed positive operating leverage of 3.1 percentage points, helped by cost discipline and efficiency gains. Telstra reduced underlying operating expenses by $179 million, or 2.4%, which more than offset pressure from rising costs.
That is a useful sign. In a mature business like Telstra, cost control can have a meaningful impact on earnings and cash flow. Small improvements can add up because the company operates at such scale.
Telstra also increased its on-market share buyback from up to $1 billion to up to $1.25 billion. Management said the buyback is expected to support earnings and dividend per share growth.
I like that because it suggests the company is using its balance sheet to create additional shareholder value.
Foolish takeaway
Telstra shares are no longer obviously cheap after their strong run. But I still think they could be worth buying in May.
The dividend profile looks solid, the mobile business continues to perform well, and management is showing good cost discipline while returning capital to shareholders.
For investors seeking a relatively defensive ASX income share with steady earnings potential, I think Telstra still deserves a place on the watchlist.
