Can income investors bank on CBA growing its dividend yield by 18%?

Commonwealth Bank of Australia (ASX: CBA) shares are currently the lowest yielding of the big four, offering investors a mediocre 3.57% dividend yield. But could it be about to grow the passive income it hands to investors?

One expert thinks the biggest of the S&P/ASX 200 Index (ASX: XJO)’s big four banks could boost its dividends significantly in the coming years.

Indeed, it could be on track to grow its offerings by 18%, potentially boosting its yield along with them.

Right now, the CBA share price is trading at $107.65.

Let’s take a closer look at what income investors might expect from CBA shares in the coming years.

CBA’s dividends tipped to soar

CBA shares might not be the big four bank income investors tend to turn to. Indeed, the giant’s 3.57% yield is dwarfed by the likes of ANZ Group Holdings Ltd (ASX: ANZ) shares.

ANZ – which happens to be the smallest of the big four ­– currently offers a 5.89% dividend yield, the highest of its peers.

But CBA’s dividends might be about to jump 18%, according to broker Morgans.

It tips the bank to offer $4.10 of dividends per share this financial year, as my Fool colleague James recently reported.

That’s up from $3.85 per share last financial year and comprises a $1.75 interim payout and $2.10 final offering, both of which were fully franked.

And the financial year 2024 could bring even more dividend growth. Morgans forecasts CBA to declare $4.55 of dividends per share next fiscal year.

That would see the bank trading with a 4.22% dividend yield at its current share price – an 18.2% increase.

Are CBA shares a passive income buy?

With that in mind, could CBA shares represent a passive income buy right now?

Interestingly, Morgans had a hold rating on the stock in November. It slapped it with a $94.57 price target – representing a potential 12% downside.

Meanwhile, Jefferies is said to expect the CBA share price to slide 15% to trade at $91.30.

The post Can income investors bank on CBA growing its dividend yield by 18%? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 2 ASX 200 shares with multi-decade growth runways: Scott Phillips
• 5 things to watch on the ASX 200 on Thursday
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• 3 ASX 200 shares smashing new 52-week highs on Wednesday
• Why is this ASX 200 mining share halted today?

Motley Fool contributor Brooke Cooper 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 Jefferies Financial Group. 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.

from The Motley Fool Australia https://ift.tt/hUlE0AY