I'd say Telstra Group Ltd (ASX: TLS) shares could be one of the best ASX blue-chip options for retiree investors.
Telstra may not be quite as large as Commonwealth Bank of Australia (ASX: CBA) or BHP Group Ltd (ASX: BHP). But, I'm going to explain why I think Telstra could be one of the strongest blue-chips that retirees could want to buy right now.
Let's run through my thoughts.
Image source: Getty Images
Diversification
There are two elements that make me believe Telstra shares are an effective pick for boosting diversification.
Firstly, Telstra is much more than just a telco that provides services for mobiles and home broadband. It also provides wholesale telco services, it has an international division, it has an infrastructure division, it services large (and small) business customers, and so on.
I also think it provides pleasing industry diversification. The S&P/ASX 200 Index (ASX: XJO) is dominated by ASX mining shares and ASX bank shares, so having Telstra in the portfolio would actually give investors a fairly different earnings base.
In my view, given how integral the internet seems to be in many areas of life these days, Telstra is one of the few ASX blue-chip shares that could provide investors with defensive earnings.
Rising dividend
Despite the headwinds of higher inflation and interest rates, the business has managed to hike its annual dividend each year in the last few years.
For example, owners of Telstra shares saw a 10.5% hike of the interim dividend per share to 10.5 cents. In my eyes, not many ASX blue-chips are likely to deliver that level of growth in the FY26 result.
Only the Telstra board of directors know how much the business is going to pay in the coming result, but I believe it's very likely to be higher than the FY25 payout.
How much larger? According to the forecast on Commsec, the business is projected to pay an annual dividend per share of 21 cents. That would represent year-over-year growth of 10.5% and it would be a grossed-up dividend yield of approximately 5.6%, including franking credits, at the time of writing.
In FY27, the dividend could grow again to 21.5 cents per share. That would be a grossed-up dividend yield of 5.8%, including franking credits, at the time of writing.
Well-positioned for the current conditions
I think the company's earnings are more defensive and predictable than both ASX bank shares and the ASX mining shares. This increases reliability, perhaps at a time when investors need it most.
Inflation is problematic for a number of households and businesses. However, Telstra can use this time to increase its prices and improve its average revenue per user (ARPU), as well as the profit margins.
Australia is becoming increasingly digital, so this is a good tailwind for the company's earnings in the coming years as we continue to use internet-connected devices for work, education, connection and entertainment.
According to the forecast on Commsec, the Telstra share price is valued at 26x FY26's estimated earnings.
Telstra isn't the only ASX share that could be a great pick for retirees, though.
