If you're searching for passive income options in 2023, I would suggest you look at Telstra Group Ltd (ASX: TLS).
It is, of course, Australia's largest provider of telecommunications and information products and services.
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Why Telstra could be a top passive income option
I think Telstra would be a great option for income investors due to its significantly improved outlook. After almost a decade of struggles, Telstra is rejuvenated and returned to underlying growth in FY 2022 at long last thanks to the success of its T22 strategy.
But management isn't resting on its laurels, it intends to build on this in the coming years with its new T25 strategy.
When it was announced last year, the company's CEO at the time, Andrew Penn, commented:
If T22 was a strategy of necessity, T25 is a strategy for growth.
The strategy sees Telstra aim for sustained growth and value by targeting mid-single digit underlying EBITDA [earnings before interest, tax, depreciation, and amortisation] and high-teens underlying earnings per share compound annual growth rates (CAGR) from FY 2021 to FY 2025.
I believe this bodes well for its dividend payments in FY 2023 and beyond.
And while the current economic environment is undoubtedly difficult for companies to operate in, Telstra appears in a better position than most to navigate it. This is due to the recent introduction of inflation-linked pricing and the defensive nature of its business.
For me, and likely many others, my phone and broadband would be among the last things I would sacrifice if money were tight.
Telstra dividend forecast
What can you expect from the Telstra dividend in 2023?
A number of analysts believe the telco giant will increase its dividend again in FY 2023. For example, a recent note reveals that Morgan Stanley expects an increase to 17 cents per share next year. This equates to a fully-franked 4.2% dividend yield based on the latest Telstra share price.
But there's always the potential for more. Telstra's recent restructure means that it can now look at divesting some of its assets to unlock value for shareholders. This could potentially result in share buybacks or even special dividends in 2023.
All in all, I believe this makes Telstra a top passive income option in 2023.
