We have seen several dividend cuts from ASX banks over the past year, which one now has the biggest dividend yield?
National Australia Bank Ltd (ASX: NAB) cut its half-year dividend from $0.99 per share to $0.83 per share.
Westpac Banking Corp (ASX: WBC) cut its half-year dividend from $0.94 per share to $0.80 per share.
Australia and New Zealand Banking Group (ASX: ANZ) saw its dividend franking level reduced from 100% to 70%.
Bank of Queensland Limited (ASX: BOQ) reduced its full year FY19 dividend from $0.76 per share to $0.65 per share.
But there are three domestic ASX banks that haven’t reduced their income over the past year. The FY19 Mystate Ltd (ASX: MYS) dividend was maintained at $0.2875 per share. The Commonwealth Bank of Australia (ASX: CBA) dividend was maintained at $4.31 per share and the Bendigo and Adelaide Bank Ltd (ASX: BEN) dividend was maintained at $0.70 per share.
So, for new investment money, which ASX bank offers the biggest dividend yield?
NAB has a grossed-up dividend yield of 9.4%.
Westpac has a grossed-up dividend yield of 9.25%.
ANZ has a grossed-up dividend yield of 8.1%.
BOQ has a grossed-up dividend yield of 12.6%.
Mystate has a grossed-up dividend yield of 7.8%.
CBA has a grossed-up dividend yield of 7.4%.
Bendigo and Adelaide Bank has a grossed-up dividend yield of 9.9%.
It’s clear that banks like NAB, Westpac and BOQ have some of the biggest dividend yields, but they could be yield traps if the dividends are cut again in 2020.
I can understand why some investors are looking for some of the biggest yields on offer, but I think it would be better to go for lower yields and that are more likely to be maintained. That’s why I’d rather go for Mystate, CBA and Bendigo Bank over some of the other ones.
For income I’d much rather think about these dividend shares for my own portfolio rather than any of the banks because of lower interest rates and higher capital requirements.
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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 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.