How many Westpac shares do I need to buy for $10,000 of passive income?

Owning Westpac Banking Corp (ASX: WBC) shares could be an appealing move for investors wanting passive income.

Westpac typically trades on a relatively low price-earnings (P/E) ratio and has a fairly generous dividend payout ratio, translating into a pleasing dividend yield.

The ASX bank share is forecast to continue delivering consistent dividends for the foreseeable future, which is a compelling attribute as an ASX dividend share.

As long as borrowers continue to repay their loans and Westpac attracts new loans, its financials could continue to be pleasing.

Dividend forecast

The bank is projected to deliver a pleasing level of dividend income to investors in FY26.

According to the projection on CMC Invest, the company is forecast to pay an FY26 annual dividend per share of $1.55. That translates into a forward grossed-up dividend yield of 6.1%, including franking credits, at the time of writing.

Pleasingly, Westpac is projected to increase its payout to $1.595 per share in FY27. Growth of around 3% is not exactly shooting the lights out, but I think any decent growth is pleasing in a very competitive industry. Macquarie Group Ltd (ASX: MQG) is working very hard at muscling in on the space.

How many Westpac shares are needed for $10,000 of passive income?

To receive that level of dividend income, we do need quite a substantial number of Westpac shares.

It depends on whether we want to include the franking credits or not as part of the income total. I think it counts because it’s included as part of our taxable income and they’re refundable tax credits. But I’ll show both numbers.

Excluding franking credits, based on the projected FY26 Westpac annual dividend per share of $1.55, an investor would require 6,452 Westpac shares to unlock $10,000 of passive income.

Including franking credits, an investor would only need 4,517 Westpac shares to generate that level of dividends.

Of course, with the fact that Westpac’s dividend is expected to rise to almost $1.60 per share in FY27, investors wouldn’t need as many Westpac shares to receive $10,000 of annual passive income next year.

Of course, I’d suggest investors get their dividends from a variety of sources, rather than just Westpac.

Is this a good time to invest in Westpac shares?

According to CMC Invest, of nine recent analyst ratings on the business within the business, the average price target is $34.33. That implies a possible mid-single-digit decline. Of those nine ratings, three are holds, and six are sells.

In other words, professional investors are not excited by the valuation at the moment. Therefore, I’d focus on other ASX shares that could be better buys.

The post How many Westpac shares do I need to buy for $10,000 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 positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.