The Commonwealth Bank of Australia (ASX: CBA) dividend yield has seen a significant jump after the CBA share price declined significantly following its FY26 third-quarter update and the Australian Federal budget.
As the above chart shows, at the time of writing, it’s down more than 10% since 7 May. As a result, the dividend yield has also been boosted by more than 10%.
Let’s take a look at what has happened to the potential CBA dividend yield.
Forecast CBA dividend yield for FY26
The ASX bank share has provided investors with steady dividend growth since the negative effects of COVID-19 in 2020.
Experts expect the business to increase its annual dividend per share in FY26.
CMC Invest suggests the bank could pay an annual dividend per share of $5.05 in the 2026 financial year â this would be growth of 4% year-over-year. At the current CBA share price, that implies a possible grossed-up dividend yield of 4.5%, including franking credits.
Is dividend growth likely in FY26?
The ASX bank share is doing many of the right things to grow its earnings.
In the FY26 third-quarter update, Commonwealth Bank reported quarterly cash net profit of approximately $2.7 billion, representing year-over-year growth of 4%. That earnings growth rate essentially matches what analysts expect the FY26 annual dividend growth to be.
Within that quarterly update, business lending increased 12.5%, household deposits rose 9.1% and home lending grew 7.1%. But, a key negative was that the ASX bank share’s loan impairment expense was $316 million, with higher collective provisions reflecting heightened uncertainty. However, underlying portfolio credit quality remained “sound”.
What about FY27?
Analysts expect further dividend growth for owners of Commonwealth Bank shares in the subsequent financial year.
In FY27, the ASX bank share is forecast to see the annual dividend per share rise to $5.20 per share. That would represent year-over-year growth of 3%, if the prediction on CMC Invest comes true.
At the current CBA share price, that translates into a potential FY27 grossed-up dividend yield of 4.7%, including franking credits, at the time of writing.
So, while the CBA dividend yield has certainly increased in recent times, the ASX bank share still does not offer the same size dividend yield as some of its peers like National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC) and ANZ Group Holdings Ltd (ASX: ANZ).
CBA is not one of the first shares I’d buy for dividends.
The post Is the CBA share price a buy for its 4.5% dividend yield? appeared first on The Motley Fool Australia.
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Motley Fool contributor Tristan Harrison 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.