How much passive income would a $15,000 investment in Telstra shares pay?

Can investors call on Telstra for appealing dividends?

| More on:
Different Australian dollar notes in the palm of two hands, symbolising dividends.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Owners of Telstra Group Ltd (ASX: TLS) shares regularly get a good dividend. In this article, we're going to look at how much passive income we could get by investing $15,000 at the current Telstra share price.

Most readers may already know that Telstra is the largest telecommunications business in Australia, with what's seen as a strong market position in the 5G space.

The business has been paying passive dividend income for decades and recently started increasing the payments again to shareholders.

How large will the next dividend be?

In FY23 the business paid an annual total of 17 cents per share to shareholders. That represented a fully franked dividend yield of 4.4% or a grossed-up dividend yield of 6.25%

However, those dividend payments are in the past and not necessarily representative of what the next 12 months of dividends will be.

Telstra's board of directors are the ones that decide what the size of the dividend payments will be. But, analysts can make a projection about what they think the upcoming dividend will be.

On Commsec, the current projection is that owners of Telstra shares will receive an annual dividend of 18 cents per share. That translates into a fully franked dividend yield of 4.6% and a grossed-up dividend yield of 6.6%.

How much passive income would a $15,000 investment in Telstra shares generate?

If we assume that Telstra will indeed pay 18 cents per share, in FY24, then investors could get a cash dividend of $690, and including franking credits it could result in grossed-up dividend income of approximately $986.

With a $15,000 investment, it could generate almost $1,000 of passive dividend income.

But, there's more to the potential income than just what happens in the next 12 months.

Estimates on Commsec suggest that profit could grow in FY25 and the dividend could increase again to 19 cents per share.

With that projection in mind, a $15,000 investment today might pay $735 of cash dividends and $1,050 of grossed-up dividend income in FY25.

Can the ASX telco share keep growing profit?

A number of factors could mean that Telstra is able to grow its profit in at least two or three of the next financial years.

Telstra is growing its number of subscribers, it's increasing prices for mobile and broadband subscribers, it's experiencing the return of roaming revenue from visitors to Australia, it's aiming to reduce costs and it's diversifying its earnings geographically (into Asia) and in different sectors (such as healthcare and perhaps cybersecurity).

If profit keeps growing, then the business could continue to increase its annual dividend income.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Communication Shares

Young woman thinking with laptop open.
Communication Shares

6% potential yield? Here's the Telstra share price and dividend forecast

Can the telco deliver strong returns?

Read more »

Delighted adult man, working on a company slogan, on his laptop.
Communication Shares

3 reasons to buy this quality dividend-paying ASX 200 stock today

A leading fund manager expects more near-term outperformance from this ASX 200 dividend stock.

Read more »

Delighted adult man, working on a company slogan, on his laptop.
Communication Shares

Macquarie initiates coverage of Superloop shares with outperform rating

The broker reckons Superloop has what it takes to soar.

Read more »

woman on phone
Communication Shares

Here's the earnings forecast out to 2029 for Telstra shares

Are further Telstra share price gains possible? Let’s consider the earnings outlook.

Read more »

A man surrounded by huge piles of paper looks through a magnifying glass at his computer screen.
Communication Shares

Why this fundie sees 'a potential turning point' for Seek shares

Blackwattle Investment Partners says Seek management appears to be refocused on shareholder returns.

Read more »

A woman sits in a cafe wearing a polka dotted shirt and holding a latte in one hand while reading something on a laptop that is sitting on the table in front of her
Communication Shares

Up 100% in a year, can the Superloop share price continue to deliver solid returns?

Superloop continues to generate momentum as its customer base expands.

Read more »

Two male ASX investors and executives wearing dark coloured suits sit at a table holding their mobile phones discussing the highest trading ASX 200 shares today
Communication Shares

Is the Telstra share price a buy right now?

Telstra shares have steadily risen over the last few months. Are they still good value?

Read more »

A cute little kid in a suit pulls a shocked face as he talks on his smartphone.
Dividend Investing

Up 38% in a year, is it too late to buy Telstra shares for the dividends?

A leading expert gives his verdict on Telstra’s passive income appeal following the stock's 38% 12-month share price gains.

Read more »