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Commonwealth Bank of Australia vs Telstra shares: Which is better for passive income this month?
When it comes to earning regular, reliable passive income on the ASX, it's hard to overlook blue-chip stalwarts like Commonwealth Bank of Australia (ASX: CBA) and Telstra Group Ltd (ASX: TLS). Both are household names, offering fully franked dividends and wide investor ownership. But if you're weighing up CBA vs Telstra shares for your income portfolio right now, there are some key differences to keep in mind before jumping in.
The case for Commonwealth Bank of Australia
Commonwealth Bank of Australia is Australia's largest bank by market cap and one of the country's most recognised brands. With a long history, CBA delivers retail, business and institutional banking, along with wealth management, insurance, and broking services to millions of customers across Australia, New Zealand, and several major global hubs.
Looking at the fundamentals, three points really stand out for CBA. Firstly, it's massive: with a market cap of $252.78 billion, it dwarfs most ASX players. Secondly, it offers a fully franked dividend yield of 3.32%, with its most recent dividend (final, paid September 2026) clocking in at $2.70 per share. Thirdly, CBA's dividend payouts have shown remarkable stability, with dividends paid twice a year and franking always at 100%.
As of its most recent profile, CBA is one of the "big four" banks in Australia and, with its scale, offers a defensive income stream many investors have come to trust.
The case for Telstra
Telstra is Australia's largest telecommunications and information services business, operating a vast fixed and mobile network and serving both retail and business customers across the country. After a recent restructure, Telstra has diversified into four main segments, bringing in subsidiaries like ServeCo, InfraCo Fixed, Amplitel, and Telstra International to manage different aspects of its infrastructure and services.
Telstra's appeal for income investors is straightforward: its dividend yield is higher than CBA's, sitting at 4.35% based on current figures. The company has a market cap of $53.58 billion, making it large and established, but more nimble than a major bank. Franking sits at just over 90% for its recent payments, and the last two dividends (interim and final for FY26) have been 10.5 cents per share.
While Telstra's dividends have fluctuated a little over the years (including a mix of regular and special payments), it remains a cornerstone income pick for many Australians who want reliable, regular payments from a well-known brand.
Valuation comparison
With the two companies serving very different industries, valuation multiples are best compared with some caution. Still, the side-by-side fundamentals are useful for gauging income value:
| Metric | Commonwealth Bank of Australia | Telstra |
|---|---|---|
| Market Cap | $252.78 billion | $53.58 billion |
| P/E Ratio | 23.37 | 24.27 |
| Dividend Yield | 3.32% | 4.35% |
| Earnings per share | 6.517 | 0.199 |
| Dividend per share | $5.05 | $0.21 |
| Franking | 100% | ~90% |
Both CBA and Telstra are trading at P/E ratios above 23, which are broadly similar, especially considering sector variations. One note: CBA's P/E and EPS align mathematically, but with Telstra, the P/E ratio may be based on a different earnings measure than the per-share EPS reported, which could explain some apparent inconsistency.
Recent share price performance
Comparing recent share price history until 22 September:
- Commonwealth Bank of Australia closed at $152.33, down 0.43% for the day. The year-to-date return stands at -2.0%.
- Telstra Group Ltd closed at $4.83 on 22 September 2026 (the previous day), flat for the day, and is up 3.5% year-to-date.
So, Telstra has outperformed CBA on share price return so far this year, even while the bank has edged down.
Which is the better buy?
If regular passive income is top of my list, I'd lean towards Telstra this month. Its current dividend yield is meaningfully higher than Commonwealth Bank of Australia's, at 4.35% vs 3.32%. Both companies offer a level of franking that makes their after-tax income attractive, but CBA's 100% franking is only a modest edge over Telstra's ~90%.
Telstra's share price has also delivered positive momentum year-to-date, while CBA has slipped. That recent performance gives me extra comfort that the higher yield isn't simply a function of a falling share price.
There's no question CBA delivers stability, scale and one of the longest dividend records on the ASX, and it remains a buy-and-hold classic for income. But if I'm targeting the best yield for passive income right now, Telstra edges in front for me — provided I'm comfortable with the telco sector's different risks and growth outlook. For this income chaser, Telstra gets my vote this month.
