Are CBA shares worth buying for dividend income in 2023?

Commonwealth Bank of Australia (ASX: CBA) shares have always been a popular choice for ASX investors seeking dividend income. No doubt this trend will continue in 2023. But should it?

Since we are at the start of the year, it might be a good chance to examine some ASX articles of faith such as these and see if they still hold true. So let’s check out what might be in store for CBA’s dividend this year and beyond.

So let’s start at the beginning. Last year, Commonwealth Bank shares paid out two dividends. The first was the interim dividend of $1.75 per share that investors received in March. The second was the final dividend of $2.10 per share that was doled out in September.

Both dividends, as is typical with CBA, came fully franked.

Commonwealth Bank shares were trading at $103.47 each, up 0.31% at the market close today. At this pricing, those two dividend payments give the CBA share price a trailing dividend yield of 3.72%. That grosses up to 5.31% with the full franking.

So that’s where we’re starting out at. If an investor picks up CBA shares at this price today, and the bank manages to pay out exactly the same dividends in 2023 as it did in 2022, then investors can expect to receive a yield of 3.72% on their capital.

That’s decent, but arguably nothing spectacular. Many savings accounts and term deposits offer better yields in this era of rising interest rates.

But what if CBA juices up its dividends this year? Well, if that happened, investors would enjoy an even greater yield on cost.

ASX broker tips higher dividends from CBA shares

ASX broker Morgans reckons CBA will indeed be in a position to give income investors a dividend pay rise. As my Fool colleague covered late last month, the broker expects CBA shares to pay out a total of $4.10 in dividend income per share in FY2023.

Even better for investors, Morgans reckons CBA will up its game again in FY2024, with total dividends per share of $4.55.

If these scenarios were to be realised, these dividends would give CBA shares a forward yield of 3.96% and 4.4%, respectively, on the current CBA share price.

So if these numbers turn out to be accurate, CBA could indeed be a solid buy for ASX dividend income in 2023. But we shall have to wait and see what CBA pulls out of its dividend hat.

The post Are CBA shares worth buying 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 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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