ASX 200 investors: A big bank stock that pays 5% dividend income

This year might be an interesting ride for those invested in S&P/ASX 200 Index (ASX: XJO) stocks. The market could face plenty of volatility, with recessions tipped to occur in major global economies and the Reserve Bank of Australia (RBA) continuing its battle against inflation.

Fortunately, blue chip shares – like big four bank Westpac Banking Corp (ASX: WBC) – could offer some reprieve from the chaos. Not to mention, the ASX 200 staple is also a dividend powerhouse.  

Are Westpac shares a winning dividend income buy?

The Westpac share price has been on a roll lately, gaining 5% so far this year and 7% over the last 12 months to trade at $23.91 today. Meanwhile, both its earnings and dividends have remained strong.

The bank posted a near-$5.7 billion profit for financial year 2022 – a 4% year-on-year improvement.

That led it to declare a fully franked 64 cent per share final dividend – marking a 6% jump on that of the prior financial year.

That brought its full-year offerings up to $1.25 per share – leaving it with a 5.2% dividend yield at the time of writing.

At such a level, a $5,000 investment in the ASX 200 big bank stock would pay out $261 of passive income annually.

The only ASX 200 big bank to best that yield is ANZ Group Holdings Ltd (ASX: ANZ). It currently offers a 5.6% dividend yield.

And Westpac’s offerings are on track to grow, according to experts.

ASX 200 big four bank tipped to grow dividends in FY23

Both Goldman Sachs and Morgans believe Westpac shares are a buying opportunity amid plenty of hope for the bank’s dividends.

The former tips the stock as the best ASX 200 big four bank to buy. It also expects it to pay out $1.484 in dividends this fiscal year.

Factoring in Goldman Sachs’ target price of $27.68, Westpac could soon trade with a 5.36% dividend yield.

The latter broker, meanwhile, is less bullish on the Westpac share price but more hopeful of the bank’s dividends.

It tipped the ASX 200 bank to pay $1.53 per share in dividends this financial year, while its share price has been slapped with a $25.80 price target.

If both of Morgans’ forecasts come to fruition, Westpac shares could offer a whopping 5.9% dividend yield. That’s what I’d call an opportunity!

The post ASX 200 investors: A big bank stock that pays 5% dividend income appeared first on The Motley Fool Australia.

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More reading

• Expect big yields from these ASX 200 dividend shares in 2023: analysts
• NAB shares: A top tip for passive income?
• How I’d invest $300 a month in ASX shares to target an extra income of $20,000 per year
• Should I buy Westpac shares for the big dividend?
• Buy Westpac and this ASX 200 income share: experts

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. 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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