It has been an excellent day for the Commonwealth Bank of Australia (ASX: CBA) share price. In afternoon trade, the banking giant’s shares are racing higher after it delivered strong earnings and dividend growth during the first half of FY 2022.
At the time of writing, the CBA share price is up 4.5% to $98.37.
What’s the go on the CBA dividend?
The good news for shareholders, is that as well as seeing their shares increase in value today, they will soon be receiving a dividend that is up materially on the same period last year.
In case you missed it, this morning Australia’s largest bank reported a cash net profit after tax of $4,746 million. This was up 23% over the prior corresponding period and well-ahead of consensus estimates.
As a comparison, Goldman Sachs was forecasting cash earnings of $4,295 million, Morgans expected $4,320 million, and the consensus estimate stood at ~$4,500 million.
This allowed the CBA board to declare a $1.75 per share fully franked interim dividend. And while this is a touch short of the consensus estimate of ~$1.80 per share, it is still a sizeable increase of 17% over last year’s interim CBA dividend.
This slight miss appears to have been driven by the bank’s decision to payout 62% of cash earnings instead of its target range of 70% to 80% of earnings. Though, management highlights that this dividend represents a payout ratio of 70% after adjusting for long run loan loss rates.
Looking ahead, the board advised that the CBA dividend will continue to be 70% to 80% of cash earnings where possible.
It explained: “The Bank will continue to target a full year payout ratio of 70-80% of cash NPAT and an interim payout ratio of ~70% of cash NPAT. In considering the sustainability of dividends, the Board will continue to take into account a number of factors, including long term average loss rates.”
When is payday?
This latest CBA dividend will be paid to eligible shareholders next month on 30 March.
To be eligible, you’ll need to own CBA’s shares at the close of play the day before the ex-dividend date of 16 February. This means you have until next Tuesday to buy shares if you want to receive it.
As for shareholders, the bank is offering a dividend reinvestment plan (DRP). However, on this occasion there will be no discount applied to the shares allocated under the plan.
The post Everything you need to know about the CBA (ASX:CBA) interim dividend appeared first on The Motley Fool Australia.
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More reading
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Motley Fool contributor James Mickleboro 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 Bruce Jackson.
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