How big will the CBA dividend be in 2022?

Commonwealth Bank of Australia (ASX: CBA) is among Australia’s biggest dividend payers.

It is one of the big four domestic ASX banks in Australia, alongside National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group Ltd (ASX: ANZ).

In FY21, Commbank paid an annual dividend of $3.50 per share. That was an increase of 17% compared to FY20.

So, how big will the dividend from CBA be in FY22?

What we already know about the CBA dividend

More than half of the bank’s 2022 financial year has already occurred.

In February 2022, the business announced an interim dividend of $1.75 per share. That represents a 17% increase on the FY21 half-year dividend.

The interim dividend represented a ‘normalised’ cash payout ratio of around 70%, which was in line with the board’s interim target dividend payout ratio, normalised for long run loan loss rates.

In the first half of FY21, the bank saw “strong financial and operational performance delivered in a low rate environment through continued customer focus, disciplined execution and investment.”

CBA’s cash net profit after tax (NPAT) rose by 23% to $4.75 billion, supported by reduced remediation costs and lower loan loss provisions due to an improved economic outlook. However, it was impacted by lower margins.

The net interest margin (NIM) dropped to 1.92%, which was down 17 basis points compared to the second half of FY21. CBA blamed some of the decline on customers switching to lower margin fixed home loans, the impact of rising swap rates due to market expectations of higher interest rates, and continued pressure from home loan competition.

Expectations for FY22

Commsec currently has a dividend forecast of $3.85 per share for FY22. That estimate is from external data providers, the projection hasn’t come from Commonwealth Bank.

If CBA were to pay an annual dividend of $3.85, that would translate into a grossed-up dividend yield of around 5.25%.

But Commsec isn’t the only place that provides dividend estimates.

Morgan Stanley thinks the FY22 dividend that CBA pays will be equivalent to a grossed-up dividend yield of 5.2%.

UBS has one of the lowest dividend projections for CBA in FY22, with an estimated grossed-up dividend yield of 4.8%.

Looking further ahead

CBA is expected to pay dividends beyond FY22, of course. What could dividends beyond the 2022 financial year look like?

The big four ASX bank is expected to keep growing its dividend in FY23 and FY24.

Using Commsec’s projections, CBA is predicted to pay an annual dividend per share of $4.03 in FY23 and $4.25 in FY24. This would see the bank almost return to the level of dividends it paid in FY18 and FY19.

The FY23 and FY24 projected dividends translate into grossed-up dividend yields of 5.5% and 5.8%, respectively.

The post How big will the CBA dividend be in 2022? 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 recommended Westpac Banking Corporation. 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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