Shares of Commonwealth Bank of Australia (ASX: CBA) have retreated slightly ahead of the bank's highly anticipated half-year profit results, which will be released to investors on Wednesday morning.
While the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has fallen slightly under 0.5% for the day, Commonwealth Bank has dropped 0.6% to be trading at $92.35. At that price, the stock is trading on a multiple of 16.4 times the bank's forecast earnings, giving it a market capitalisation of just over $150 billion.
It is expected that the bank will report a record interim profit of around $4.56 billion – eclipsing its previous record of $4.2 billion – while bad debts should fall marginally, along with a slight retraction in its net interest margin (the profit it makes on its loans). However, the big attraction will be the bank's dividend, which has acted as an investor-magnet in this low interest rate environment.
Assuming the bank maintains a dividend payout ratio of around 75%, investors could expect a dividend worth roughly $2 per share, up from last year's $1.83 interim dividend payment. While the bank could surprise investors with a slightly higher dividend, a dividend lower than that would likely see investors punish the stock after the report's release.