Telecom Plus (LSE: TEP) strikes me as one of the FTSE’s most overlooked passive income engines.
While the share price has drifted lower of late, its dividend-yield allure has only strengthened. Resilient cash generation and a business model designed for steady, recurring revenue underpin this.
For investors prioritising passive income over price action, I believe this stock offers a rare blend of yield, stability and long‑term dependability.
So, how much could investors make from it over time?
Rising dividend yield projections
The UK’s only integrated multi-utility provider currently generates a dividend yield of 6.9%. This is nearly double the current average dividend yield of the FTSE 250 of 3.5%.
Moreover, its dividend record has strengthened meaningfully in recent years. In 2022 it was 57p, in 2023 80p, in 2024 83p, and in 2025 94p.
Looking ahead, the consensus forecast of analysts indicates that these will rise again — to 101.4p this year, 110.2p next year, and 118p in 2028. This would generate respective dividend yields of 7.5%, 8.1%, and 8.7% on the current £13.59 share price.
These levels sit firmly in the ultra‑high-yield bracket. This is a rarity across the FTSE indexes, and a key reason why I view the stock as a compelling passive‑income candidate.
How justified are these forecasts?
Rises in a company’s dividends (and share price) are ultimately powered by growth in earnings (or ‘profits’). A risk to these for Telecom Plus is intense competition cutting into its customer growth and squeezing margins.
However, analysts forecast its earnings will grow by an average of 10.3% a year to end-2028. This looks well justified to me, given the firm’s recent results.
The full fiscal-year 2025 figures saw adjusted pre-tax profit climb 8.1% year on year to a record £126.3m. Customer numbers jumped 15% to 1.163m, and the dividend increased 13.3% to the current 94p.
The company also announced a major partnership with TalkTalk. This saw the acquisition of around 95,000 fixed-line and broadband customers to which Telecom Plus can upsell additional utility services.
Management reiterated its medium-term target of 2m customers and continued double-digit growth for the fiscal-year 2026. It did the same for its adjusted pre-tax profit target for 2026 of £132m-£138m (versus £126.3m in 2025).
How much could be made over time?
A £5,000 holding in the firm would make investors £6,897 in dividends after 10 years on the forecast 8.7% yield. This assumes the dividend payout stays at its current level, although it could rise, fall, or remain unchanged.
This also assumes that dividends are reinvested back into the shares to harness the power of ‘dividend compounding’.
On the same basis, after 30 years the dividends received would total £62,358. Including the original £5,000 investment, the holding would be worth £67,358 by then.
At that point, it would be producing a passive annual income of around £5,860 from dividends alone!
My investment view
I already have a holding in the same sector — BT — so buying another might unbalance the risk-reward profile of my portfolio.
Nonetheless, I am trying to convince myself that actually it might be okay to buy it anyway for… well, some reason or another.
For those without this conundrum and looking for a strong ultra-high-yield passive‑income candidate, I think the stock is well worth considering.
