
Commonwealth Bank of Australia vs AMP shares
If you’re considering Commonwealth Bank of Australia (ASX: CBA) versus AMP Ltd (ASX: AMP) shares for passive income, you’re not alone. Both are well-known names in Aussie financial services, but they stand in very different corners of the market. Let’s break down where these two fit in the ASX ecosystem, how their dividends compare, and which might better suit a 40-year-old investor searching for reliable income.
The case for Commonwealth Bank of Australia
Commonwealth Bank of Australia, or CBA, is the bank most Australians recognise. As one of the “big four” local banks, CBA offers everything from everyday banking to superannuation, insurance, funds management, and broking. Its huge customer base and geographic reach through Australia, New Zealand, Asia, and beyond make it a dominant force in Australian financial services.
What jumps out in the numbers? First, CBA has a massive market cap of $251.64 billionâthis is financial muscle few can match on the ASX. Its dividend yield is 3.31%, and those dividends are fully franked at 100%, meaning investors benefit from the maximum tax credits. The trailing P/E ratio sits at 23.38, reflecting the bank’s premium status (and market confidence) but also suggesting investors pay up for its perceived stability.
The case for AMP
AMP, once one of the giants in Australian wealth management, is now a very different beast to CBA. AMP still delivers superannuation, insurance, and banking products, but in recent years has massively restructuredâoffloading large business units, entering joint ventures, and refocusing on its core services. AMP is aiming to restore its reputation and grow through a more focused wealth and banking platform.
What’s striking here is the smaller scale: AMP’s market cap is $6.13 billion, a small fraction of CBA’s. Yet, its shares have soared YTD, up 43.41%, likely helped by optimism around its ongoing turnaround. The dividend yield stands at 1.95%âlower than CBAâand dividends are only 20% franked, so the tax benefit for income-seekers is much lower. Its P/E ratio sits at 34.59, higher than CBA’s, which may reflect expectations for future growth, but could also indicate the market is willing to pay more for the turnaround story.
Valuation comparison
Here’s how the key numbers stack up side-by-side:
| Metric | Commonwealth Bank of Australia | AMP |
|---|---|---|
| Market Cap | $251.64 billion | $6.13 billion |
| P/E Ratio | 23.38 | 34.59 |
| Dividend Yield | 3.31% | 1.95% |
| Dividend Franking | 100% | 20% |
| Dividend per Share (TTM) | $5.05 | $0.05 |
| Earnings per Share | 6.517 | 0.074 |
| Year To Date Return | -1.96% | 43.41% |
What stands out? CBA offers higher dividend yield and much fuller frankingâcritical if you’re relying on dividends for income in retirement or semi-retirement. AMP’s higher P/E and much lower dividend payouts, as well as only 20% franking, make it less attractive for passive income, at least on these numbers.
Recent share price momentum
Comparing recent share price performance up to 7 October:
- Commonwealth Bank of Australia closed at $150.37 on 7 Oct 2026, posting a -1.32% move that day and a YTD return of -1.96%.
- AMP closed at $2.54 on 7 Oct 2026, down 0.78% for the day but boasting a stellar YTD gain of 43.41%.
While AMP’s 2026 share performance has far outpaced CBA, its day-to-day volatility is also higher. CBA has delivered flat-to-slightly-negative returns YTD, but in the context of larger banks, that’s not unusual given macro conditions.
Which is the better buy?
If passive income is your goalâespecially with franking credits to boost after-tax returnsâI’d lean clearly toward Commonwealth Bank of Australia. The combination of a higher dividend yield (3.31% vs AMP’s 1.95%), fully franked payouts, and greater dividend reliability across many years all play in CBA’s favour. Its earnings, scale, and track record make it a mainstay for anyone seeking regular, tax-effective income.
AMP’s dramatic rebound in 2026 is eye-catching, but for passive income seekers, the thin yield, patchy franking, and the uncertainty of recent years don’t tick enough of the right boxes. AMP might suit those hunting for turnaround potential or capital gains. But for a 40-year-old after consistent, tax-friendly dividendsâthe sort that can help fund a comfortable lifestyle without too much riskâmy pick would be Commonwealth Bank of Australia.
The post CBA vs AMP: Which is better for a 40-year-old investor seeking 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.

