For many investors, Telstra Group Ltd (ASX: TLS) shares remain one of the first places they look for passive income on the ASX.
I don't find that very surprising.
The telco giant may not offer the biggest dividend yield on the market, but I think it offers something just as important in the current environment: resilience.
With cost-of-living pressures, rising interest rates, and geopolitical conflict weighing on the economy, defensive income stocks can play a very useful role in a portfolio.
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What income could Telstra provide?
According to CommSec, consensus estimates point to Telstra paying shareholders franked dividends of 21 cents per share in FY26 and then 21.5 cents per share in FY27.
Based on the current Telstra share price of $5.37, that implies a forward dividend yield of approximately 3.9% in FY26 and then 4% in FY27.
While that isn't the highest dividend yield available on the ASX, I don't think income investing should only be about chasing the largest number.
Why I like Telstra shares for passive income
I think Telstra has defensive qualities that many businesses simply don't have.
Its mobile and telecommunications networks are essential infrastructure. Households and businesses continue to need connectivity through different economic conditions, which gives Telstra a relatively stable revenue base.
In my opinion, that can be very important when the economy is uncertain.
The company has also spent recent years simplifying its operations, strengthening its mobile business, and focusing more clearly on returns to shareholders.
It has also introduced periodic price increases for its mobile and internet contracts in order to cover inflationary pressures. This supports a growing stream of recurring revenue and has thus far not led to elevated churn levels.
For me, that makes Telstra an appealing option for investors wanting a dependable income stream.
Fully-franked dividends add appeal
Another positive is franking.
The forecast dividends are expected to be largely fully franked, which can increase the after-tax value of the income for eligible Australian investors.
That can make Telstra's dividend yield more attractive than it first appears, particularly for retirees and income-focused investors.
Foolish Takeaway
I think Telstra shares are a good buy for passive income.
They may not offer the largest yield on the ASX, but they provide defensive exposure, steady cash flow, franked dividends, and a business model that should remain relevant for many years.
In this kind of uncertain market, that combination looks appealing to me.
