Telstra shares, USA News (Sydney, Australia): Owning Telstra Group Ltd (ASX: TLS) shares has been a smart pick for passive income over the last few years, according to financial commentary examining whether retirees can rely on the company to replace or supplement the Age Pension. While diversification across multiple stocks remains important, Australia’s retirement landscape offers unique considerations through dividend yields and franking credits.
Age Pension and Dividend Yield Context
Currently, the maximum annualised Age Pension amount that a single Australian retiree can receive is around $32,180. In an era of elevated inflation, businesses that grow payouts faster than inflation are viewed as particularly attractive. In the Telstra FY26 annual result, the board of directors hiked the annual payout by 10.5% to 21 cents per share. Between FY21 and FY26, the company increased its payout by 31.25%.
The FY26 payout translates into a dividend yield of 4.3% excluding franking credits and 6.0% including franking credits. That provides a more appealing dividend yield than both Commonwealth Bank of Australia (ASX: CBA) and BHP Group Ltd (ASX: BHP), which both recorded dividend yields below 6% at the time of writing.
FY27 Projections and Share Requirements
Commsec forecasts suggest owners of Telstra shares could receive an annual dividend per share of 22 cents in FY27, implying a year-over-year increase of 4.75%. This potential dividend growth aligns with Telstra’s FY27 projection of cash EBIT (operating profit) between $4.75 billion and $4.95 billion, representing potential year-over-year growth of 1.9% to 6.22%.
To receive $32,180 in dividend income matching the single Age Pension in FY27 at 22 cents per share without franking credits, an investor would need 146,273 Telstra shares at a cost of $718,200. When including franking credits as part of the dividend income goal, an investor would need 105,558 Telstra shares, totaling a cost of $518,290.
