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Which ASX bank has the biggest dividend yield?

The Royal Commission is over and a lot of the banks can let out a sigh of a relief, so are the ASX bank yields now too big to ignore?

Not every banker got off without any repercussions, with National Australia Bank Ltd (ASX: NAB) losing its CEO and Chairman for their lacklustre appearances in the Royal Commission and the criticism they received in Commissioner Hayne’s report.

However, as Westpac Banking Corp (ASX: WBC) reported this morning, bank profits are managing to tread water. As Telstra Corporation Ltd (ASX: TLS) is showing, a dividend is only as safe as its profit. But, seeing as profits are relatively stable, the bank dividends could be options for income-seekers.

Based on the last year of dividends:

NAB has a grossed-up dividend yield of 11.7%.

Westpac has a grossed-up dividend yield of 10.2%.

Australia and New Zealand Banking Group (ASX: ANZ) has a grossed-up dividend yield of 8.5%.

Commonwealth Bank of Australia (ASX: CBA) has a grossed-up dividend yield of 8.7%.

For both NAB and Westpac to offer yields above 10% is surprising and attractive. A major reason why the yield is so high is simply that the share price has come down. There is of course a risk that a dividend cut could occur.

The dividends of smaller banks are less consistent, but also worth considering in this article.

Bank of Queensland Limited (ASX: BOQ) issued a profit warning today, but it has a trailing grossed-up dividend yield of 11.6%.

Bendigo and Adelaide Bank Ltd (ASX: BEN) has a grossed-up dividend yield of 10.2%.

MyState Limited (ASX: MYS) has a grossed-up dividend yield of 8.9%.

Suncorp Group Ltd (ASX: SUN), which runs a bank, has a grossed-up dividend yield of 8.1%.

Foolish takeaway

Arguably this is currently the best time to buy bank shares for a number of years with all of the big dividends on offer. If I could only pick three it would be NAB, Westpac and Bendigo Bank. But, I personally won’t be considering buying banks until we’re in the depths of another recession.

Instead, I’d rather buy quality defensive shares like these top dependable ASX stocks.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of MyState Limited and National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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