The next Telstra Group Ltd (ASX: TLS) dividend has been announced after the release of its FY26 result.
Telstra revealed that operating profit (EBIT) increased by 1.7% to $4 billion, net profit after tax (NPAT) rose 2.7% to $2.4 billion, and earnings per share (EPS) increased by 5.3% to 19.9 cents. Cash earnings grew 11.6% to $2.9 billion, and cash EPS rose 13.8% to 25.5 cents.
The large increase in the cash earnings of the business enabled the company to hike its payout with the release of the FY26 result.
Let's see how large the final Telstra payout for FY26 will be.
Image source: Getty Images
Telstra FY26 dividend
The ASX telco share wants to provide investors with a pleasing dividend and its leadership are feeling confident about the company's outlook and financial strength.
The Telstra board of directors declared an FY26 final dividend of 10.5 cents per share, which represented a year-over-year increase of around 10.5%. That brought the full-year dividend for FY26 to 21 cents per share, also representing a year-over-year rise of 10.5%.
Investors should also know that the dividend is only 90.5% franked, meaning it's not fully franked. There are not as many franking credits attached to the payout as there have been in previous financial years.
Telstra noted that its dividend payout ratio is 106% of statutory EPS and 92% of its cash EPS. A dividend payout ratio of more than 100% is normally seen as unsustainable, but the fact that it's less than 100% of cash EPS is a mitigating factor.
Shareholders can utilise the dividend reinvestment plan (DRP) if they would prefer to receive the latest Telstra dividend in the form of new Telstra shares rather than cash, if that's what they would prefer.
When will the passive income be paid?
The payment date may be the day that shareholders are most interested in, but prospective investors also need to be aware of the ex-dividend date. Investors need to own Telstra shares before the ex-dividend date if they want to receive the payout because that's the cutoff day.
For the FY26 final dividend, Telstra said that the ex-dividend date is 26 August 2026, which is just under two weeks away. Therefore, investors need to own Telstra shares by the end of trading on 25 August if they want to be entitled to receive the upcoming payment.
After that date, Telstra will pay its FY26 final dividend on 24 September 2026.
If an investor wishes to participate in the dividend reinvestment plan, they have until Friday, 4 September at 5pm to make that election.
What is the Telstra dividend yield?
At the current Telstra share price, the FY26 final dividend translates into a dividend yield of 2.3%, excluding franking credits, and 3.1%, including franking credits.
Using the annual FY26 dividend of 21 cents per share, the dividend yield excluding franking credits is 4.4%, and 6.1% including franking credits.
That's a solid dividend yield, considering the payout rose by a sizeable amount and there could be another increase in FY27. I'd say Telstra is a compelling idea for passive income, though it's not the only stock I'd look at today.
