Looking for passive income? Try this ASX 200 blue chip

This stock's 4.66% fully franked yield is hard to ignore.

| More on:
Happy female friends taking self portrait through mobile phone at pool's edge, symbolising passive income.

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

Investors looking for high levels of passive income on the ASX right now arguably don't have a lot of lucrative options to choose from amongst the blue chip ASX dividend stocks.

Commonwealth Bank of Australia (ASX: CBA)'s dividend yield has been ravaged by the bank's seemingly endless share price ascension. CBA is currently trading at just 3.2% today.

Although not as severe, all four of the big ASX banks have also experienced sizeable yield drops over the past year or two, thanks to galloping share prices.

Meanwhile, BHP Group Ltd (ASX: BHP) and Woodside Energy Group Ltd (ASX: WDS) have given investors big dividend cuts over 2024 compared to previous years.

But there is one blue chip ASX dividend stock that I think remains a top choice for positive income seekers today.

It is none other than Telstra Group Ltd (ASX: TLS).

What makes Telstra shares a top pick for ASX passive income?

Telstra has long been a staple passive income stock on the ASX. This telco has been paying out generous and fully franked dividends for decades now.

These dividends have also held up exceptionally well over recent years, including during the pandemic and the inflationary period that followed. Telstra went from paying 16 cents per share in annual dividends in 2020 and 2021 to 16.5 cents per share in 2022, 17 cents in 2023, and 18 cents this year.

All of those dividends have full franking credits attached.

Despite this, the Telstra share price hasn't really gone anywhere for a while. Today, at the time of writing, you can pick up this telco stock for $3.86 a share, around the same price as you could have back in November 2022.

However, seeing as Telstra has substantially increased its passive income payments since then, it trades on a healthy dividend yield of 4.66% today (6.66% grossed up with Telstra's full franking). That's more than both CBA and National Australia Bank Ltd (ASX: NAB) have on the table.

Given this telco's nature as a provider of telecommunications services, I regard Telstra's passive income stream as highly reliable by ASX standards. Demand for telco services like home internet connections and mobile data plans is very inelastic in our modern world, given their essential roles in everyday life.

This means that Telstra tends to pull in profits (and, by extension, pay dividends) regardless of the health of the overall economy. With all of this in mind, I regard Telstra as a top choice for a passive income investment right now.

Motley Fool contributor Sebastian Bowen has positions in National Australia Bank and Telstra Group. 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 Dividend Investing

Man holding out Australian dollar notes, symbolising dividends.
Bank Shares

Everything you need to know about the NAB dividend

NAB will soon be sending its next payout to investors.

Read more »

Happy man holding Australian dollar notes, representing dividends.
Dividend Investing

2 high-yield ASX dividend shares for Australian retirees

Analysts are tipping big yields and big returns from these income stocks.

Read more »

A retiree relaxing in the pool and giving a thumbs up.
Dividend Investing

$30,000 in savings? Here's how I'd aim for $2,070 a year in passive income

Why not turn those savings into a regular passive income stream?

Read more »

A mother and her two adult daughters embrace outdoors.
Dividend Investing

3 reliable ASX dividend shares with yields above 6% that you can buy for less than $7 right now

These stocks are paying consistent dividends to investors.

Read more »

Two smiling work colleagues discuss an investment or business plan at their office.
Dividend Investing

Bell Potter says BHP and this ASX dividend share are top buys

Income investors might want to check out these shares that the broker is positive on.

Read more »

a man in a business suite throws his arms open wide above his head and raises his face with his mouth open in celebration in front of a background of an illuminated board tracking stock market movements.
Dividend Investing

Brokers say these ASX dividend stocks are buys

Income investors may want to check out these buy-rated stocks.

Read more »

Woman on a swing at a beach, symbolising passive income.
Dividend Investing

Overinvested in Fortescue shares? Here are two alternative ASX dividend stocks

Let’s unearth some other passive income opportunities.

Read more »

A person stands still with a virtual reality technology headset on and arms outstretched, surrounded by frozen ice and snow.
Dividend Investing

I'd make my money stretch further with these 3 ASX passive income shares

I think these three ASX passive income stocks can keep delivering for years to come.

Read more »