An income share yielding nearly 7% today — and with a forecast return of 9.1% by 2028 — has caught my eye. And in a market where many dividends look fragile, this company stands out for the visibility and consistency behind its payouts.
Its business model is built on recurring revenue, low customer churn, and strong cash conversion, giving it the sort of stability that income investors such as me crave.
So, what is the stock and how much could investors make from it?
Telecoms to energy stock
The company behind those numbers is Telecom Plus (LSE: TEP), the FTSE firm best known for its Utility Warehouse brand. Unlike traditional energy suppliers, it operates a bundled‑services model that keeps customers loyal and cash flows predictable.
And it covers everything from broadband to mobile to home energy. That mix of essential services creates unusually strong recurring revenue — exactly the foundation that supports a rising dividend profile.
A risk to these is any regulatory changes affecting household utility pricing or commissions, which could dent earnings. And this is ultimately what powers any firm’s dividends (and share price) over time. Another would be increased competition that could squeeze margins.
However, consensus analysts’ forecasts are that Telecom Plus’s earnings will rise by an average 10% a year over the medium term.
Rising dividends from a high base
The UK’s only integrated multi-utility provider currently generates a dividend yield of 6.9%. This is more than double the current 3.4% average dividend yield of its home FTSE 250 index.
However, analysts project the dividend will rise to 101.4p this year, 110.2p next year, 118p in 2028, and 124p in 2029.
These would generate respective dividend yields of 7.5%, 8.1%, 8.7%, and 9.1% on the current £13.60 share price.
How much dividend income can be made?
A £20,000 holding in Telecom Plus could make investors £29,516 in dividends after 10 years and £283,516 after 30 years. This period is commonly seen as the standard investment cycle for long-term investors. It begins with first investments around 20 and ends in early retirement options around 50.
These numbers assume the forecast 9.1% as the average yield (but this could go down or up over time as well as many other changes happening to the company). They also factor in the dividends being reinvested back into the shares to capture the turbocharging effect of ‘dividend compounding’.
Including the original £20,000 investment, the holding could be worth £303,516 by the end of 30 years. At that point, it could be producing a passive annual income of £27,620 from dividends alone!
My investment view
For me, Telecom Plus is the kind of income share that is very hard to overlook.
Its starting yield near 7%, backed by recurring revenue and a long record of dependable payouts already puts it in rare company. And the prospect of that rising towards 9%+ over the coming years only strengthens the case.
My existing stake in another firm in the telecoms sector — BT — precludes me from buying it currently. To do so would unsettle the risk/reward balance of my portfolio. But for long‑term investors who want growing passive income from a stable, essential‑services business, it seems well worth a closer look.
