Telstra Group Ltd (ASX: TLS) shares have fallen out of favour with investors this year.

The ASX dividend stock is currently fetching $3.69, which is a disappointing 17% lower than its 52-week high.

This has been driven largely by the telco giant being classed as a bond proxy. This means that when bond yields are strong, demand for Telstra's shares is weak. And with interest rate cuts being pushed out to 2025 due to sticky inflation, investors have been staying clear of the telco.

This is despite the company delivering solid results in both August 2023 and February 2024.

While this decline is disappointing for shareholders, could it be a buying opportunity for income investors? Let's find out.

Analysts at Bell Potter think Telstra could be a great option for investors at current levels. They recently commented:

In our view Telstra is starting to look reasonable value trading on an FY25 PE ratio of <20x while the average of other reasonable comps in the S&P/ASX 20 is now c.23x. Admittedly the growth outlook for Telstra is not as good as for some of the comps (e.g. Aristocrat, CSL and Goodman Group all have forecast double digit EPS growth in FY25) but Telstra still has reasonable growth (mid to high single digit forecast EPS growth in FY25) plus a good dividend yield (forecast 5.0% fully franked in FY25) and the option of selling part or all of its Infrastructure business (which in our view would unlock value and drive more of a sum-of-the-parts valuation).

The note reveals that the broker has put a buy rating and $4.25 price target on the ASX dividend stock. Based on its current share price, this implies a potential upside of 15% for investors over the next 12 months.

In addition, as mentioned above, the broker is expecting some attractive dividend yields from its shares in the coming years.

It is forecasting fully franked dividends per share of 18 cents in FY 2024, 19 cents in FY 2025, and 20 cents in FY 2026. If this proves accurate, it will mean yields of 4.9%, 5.15%, and 5.4%, respectively.

Commenting on its buy rating, Bell Potter acknowledges that Telstra's shares may not rebound quickly. But it believes this could happen in August. The broker said:

[T]here is perhaps a lack of catalysts in the near term and we do not expect the company to change its view on not selling part or all of the Infrastructure business in the short to medium term. We do, however, see the FY24 result in August as a potential catalyst of sorts given we expect the company to meet – but not exceed – the guidance with the highlights being continued strong growth in the core Mobile and Infrastructure businesses and signs of some turnaround in Enterprise.