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Will Commbank increase its dividend?

Commonwealth Bank’s (ASX: CBA) stellar profits are tipped to inspire the board to increase its payout to investors by an extra 30 cents. After substantially increasing its first half dividend to $1.64, analysts believe the full year dividend to June will come to around $3.64, compared to $3.34 this time last year.

With Commbank’s profit expected to reach a new record high of approximately $7.6 billion, shareholders are demanding more. ANZ (ASX: ANZ) has also put pressure on Australia’s biggest lender to cough up since upping its interim dividend by around 11% earlier this year.

The big four banks dividends are creating great yield plays for investors and lower prices pose a great opportunity for those looking to secure a stable long-term income.

However, Commbank is trading at much higher earnings ratio than its top four counterparts, which could mean that the markets expectations are weighing in on the stock. Compared to its peers, it currently has less growth in the near future and less dividend yield.

NAB (ASX: NAB) and Westpac (ASX: WBC) both sport dividends over 6% and will make great additions to investors’ portfolios as ‘core’ stocks.

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Motley Fool contributor Owen Raszkiewicz owns shares in ANZ.

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