Commonwealth Bank of Australia (ASX: CBA) shares can be a solid source of passive income thanks to its dividend being more reliable than its ASX bank share peers.
CBA may have a lower dividend yield than names like National Australia Bank Ltd (ASX: NAB), ANZ Group Holdings Ltd (ASX: ANZ) and Westpac Banking Corp (ASX: WBC).
Some investors may prefer to be more confident in receiving a reliable dividend than receiving the largest level of payout possible.
There’s no guarantee of dividends of course, but CBA has built a reputation as the most stable and resilient domestic bank. Reliable profits are what pays for a reliable dividend when a company like Commonwealth Bank of Australia links its dividend payments to a dividend payout ratio.
To consider how many CBA shares it would take to unlock $8,000 of annual passive income, we must first consider what the dividend could be in FY27 on a per-share basis.
Commonwealth Bank dividend projection
Using the independent forecast on Commsec, owners of the ASX bank share are projected to see a bit of dividend growth in the 2027 financial year.
In FY26, the business delivered an annual dividend per share of $5.05 (representing a 4% rise year-over-year). This came amid 8% growth in statutory net profit to $10.9 billion and 7% growth in cash profit to $11 billion.
According to the estimate on Commsec, investors could experience a 2% rise of the payout to $5.15 per share.
If the business does pay that level of dividend, it would translate into a dividend yield of 3.25% excluding franking credits and 4.6% including franking credits.
How many CBA shares would it take to unlock $8,000 of passive income?
As I’ve noted, Commonwealth Bank is not expected to pay a large dividend in the 2027 financial year, so it’ll take quite a few CBA shares to unlock that much passive income.
The required amount also depends on whether we want to include the franking credits or not as part of the dividend total.
If CBA does pay an annual dividend per share of $5.15 in FY27, then it would require 1,554 CBA shares, excluding the franking credits.
If we include the franking credits as part of the passive income, then an investor would only need 1,088 CBA shares to generate the targeted amount.
But, investors may want to look at other ASX shares that offer better return potential than one of Australia’s largest businesses.
The post How many CBA shares do I need to buy for $8,000 of passive income? 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.