Here’s the CBA dividend forecast through to 2025

For Australian income investors, the Commonwealth Bank of Australia (ASX: CBA) dividend is among the most popular options out there.

And that’s for good reason. Australia’s largest bank regularly shares a good portion of its profits with its shareholders.

First quarter update

Last week, CBA released its first quarter update and revealed a 9% increase in income over the second half average to $6.6 billion and a 2% lift in cash earnings to $2.5 billion. This was driven by higher margins and volume growth, partly offset by reduced non-interest income.

Following this update, brokers have been busy adjusting their estimates for CBA’s earnings and dividend for FY 2023 and beyond. Let’s take a look to see what one analyst is saying.

Where is the CBA dividend heading?

As a reminder, the banking giant paid its shareholders a fully franked $3.85 per share dividend in FY 2022.

According to a note out of Morgans, its analysts are expecting this to increase by 6.5% to a fully franked $4.10 per share in FY 2023. Based on the current CBA share price of $105.82, this will mean a yield of 3.9% for investors.

The broker is then expecting an even greater rise in the CBA dividend to $4.55 per share in FY 2024. This equates to a fully franked 4.3% dividend yield for that financial year.

Interestingly, Morgans is expecting the bank’s earnings and dividend to then take a small step backwards in FY 2025. This is based on its belief that “the NIM [net interest margin] uptick begins to fade and is outpaced by cost growth.”

As a result, it has pencilled in a fully franked $4.50 per share dividend for FY 2025, which represents a 4.25% yield at current prices.

Overall, income investors appear likely to continue receiving attractive dividend yields from CBA’s shares in the coming years. Though, it is worth remembering that a lot can change between now and 2025.

The post Here’s the CBA dividend forecast through to 2025 appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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