Are Westpac shares worth buying now for dividend income in 2023?

The ASX 200 big four bank shares have always had a reputation as strong dividend income payers. And Westpac Banking Corp (ASX: WBC) shares are no different.

As it currently stands after Monday’s close, Westpac shares have a trailing dividend yield of 5.38% on the table. This yield, as is typical with Westpac, also comes fully franked. That means it grosses-up to an impressive 7.69% with the value of those franking credits.

But a high yield, even a full-franked one, doesn’t always translate into a good investment. Dividend income is never guaranteed from an ASX share. And plenty of investors have been burned by the dreaded ‘dividend trap’ – buying a share for a high yield that never materialises – before.

Westpac shares have had a decent 2022 though, as you can see below:

This ASX 200 bank share is up more than 7.6% year to date this year, which looks pretty good against the S&P/ASX 200 Index (ASX: XJO)’s loss of 6%.

So that begs the question: Are Westpac shares worth buying now for dividend income in 2023 and beyond? Well, let’s see what some ASX brokers reckon.

ASX brokers name Westpac shares as a buy for dividend income

An ASX broker who thinks Westpac shares are a compelling buy right now is Goldman Sachs. As my Fool colleague James recently covered, Goldman currently rates Westpac shares as a conviction buy, with a 12-month share price target of $27.60 on the bank.

If realised, that would result in an upside of more than 18.7% from the current share price.

A big part of Goldman’s bullishness comes from its dividend projections. The broker reckons Westpac shares will pay out 148.4 cents per share in income over FY2023, rising to 160 cents per share in FY2024. No doubt income investors would be delighted if that came to pass.

But Goldman isn’t the only broker rating Westpac shares right now. As we looked at earlier this month, another broker in Morgans is also eyeing Westpac off as a ‘best idea’ right now.

Morgans has a lower share price target of $25.80 on Westpac shares. But this broker is also expecting Westpac to keep its dividends growing. It has a projection of 153 cents per share from Westpac in FY2023, rising to 159 cents per share in FY2024.

So no to one, but two ASX brokers reckon Westpac shares are a buy today for dividend income in 2023 and beyond. Time will tell if they are on the money.

The post Are Westpac shares worth buying now for dividend income in 2023? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen 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 recommended Westpac Banking. 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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