Commonwealth Bank vs Westpac: Which ASX bank stock is the better buy for resilient passive income?

Commonwealth Bank of Australia vs Westpac shares: Which bank stock is the better buy?

Australia’s major banks are among the most closely watched shares on the ASX. Whether you’re keen on steady dividends, reliable market leaders, or just want your investments to track with the backbone of the Aussie economy, there’s a good chance you’re weighing up Commonwealth Bank of Australia (ASX: CBA) vs Westpac Banking Corp (ASX: WBC) shares. Both are “big four” heavyweights, but subtle differences could matter if you want the better value, yield, or momentum in your portfolio. Let’s break it down.

The case for Commonwealth Bank of Australia

Commonwealth Bank of Australia, or CBA, is the country’s largest bank and one of Australia’s most iconic brands. It offers a wide range of financial services spanning retail, business, and institutional banking, as well as funds management, super, insurance and broking. Operating across Australia, New Zealand, Asia, the UK, and the US, CBA’s reach is truly global.

A few key numbers jump out. CBA boasts a massive market cap of $254.92 billion and a P/E ratio of 23.48, handsomely ahead of its peers on size. The dividend yield sits at 3.30%, fully franked, which is a big draw for income-focused investors. Its earnings per share are $6.517, and shareholders received a dividend of $5.05 per share in the last year. Notably, the franking is again 100%, ticking the box for those targeting tax-effective income. The bank has an unbroken track record of paying fully franked dividends stretching back decades.

The case for Westpac

Westpac Banking Corp, trading as Westpac, is Australia’s oldest bank and a mainstay of the sector. It’s home to major brands like St.George, Bank of Melbourne, BankSA and BT, serving millions of customers via a wide array of retail, business and institutional banking, and wealth management channels. According to its current company profile, Westpac operates across six divisions, demonstrating its broad exposure across banking and financial services.

Westpac’s fundamentals are competitive for value seekers. The market cap is $119.40 billion, quite a bit smaller than CBA’s, but still firmly in blue chip territory. Critically, Westpac’s P/E ratio is a more modest 17.22 — suggesting the market prices its future earnings more cautiously. Where it currently shines is dividend yield: at 4.41%, fully franked, Westpac tops CBA on payout percentage. The per-share dividend over the past year was $1.54, with 100% franking. Earnings per share currently stand at $2.029.

Valuation comparison

Here’s how the core numbers stack up:

Both have 100% franked dividends.

CBA is substantially larger, but Westpac currently offers a noticeably higher dividend yield and a significantly lower P/E ratio — which might appeal to value investors. Westpac’s lower earnings per share comes with a much lower price point too, reflecting its smaller market cap.

Recent share price performance

Comparing data up until 21 September 2026:

• Commonwealth Bank closed at $152.99 as of 21 Sep 2026, up 0.37% on the day. Year to date, CBA shares have returned -1.6%.
• Westpac closed at $34.93 on 21 Sep 2026, rising 0.52% that session. However, Westpac’s year-to-date return stands at -7.5%.

Both banks have enjoyed some positive days in September, but CBA has held up far better in 2026 so far. Westpac’s share price has underperformed, lagging by nearly 6 percentage points year-to-date.

Which is the better buy?

Both Commonwealth Bank of Australia and Westpac offer investors defensive income, blue chip security, and fully franked dividends. But if I’m picking between the two right now, I’d lean toward CBA.

Here’s why: While Westpac’s yield is higher and its P/E ratio lower (a value tick), CBA has delivered a markedly better share price performance in 2026 — despite its higher valuation. CBA’s dominant position, strong earnings per share, and consistent dividend growth over decades (with a much higher dollar payout per share) signal long-term resilience. In contrast, Westpac’s lagging share price and much smaller EPS leave me cautious.

If I wanted maximum dividend yield right this minute, Westpac would tempt me, but CBA’s quality, stability, and track record give me more confidence for the years ahead. On balance, my pick would be Commonwealth Bank of Australia.

The post Commonwealth Bank vs Westpac: Which ASX bank stock is the better buy for resilient passive income? appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart 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. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial draft. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.