The Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price is not having a great start to the trading day today. At the time of writing, ANZ shares are down a hefty 1.93% to $28.28 a share. This pulls away from the gains this ASX bank has made in recent months. Since the broader S&P/ASX 200 Index (ASX: XJO) is having a day in the green today (up 0.7%), we can safely say it's ANZ with the problem today.
So what's wrong with ANZ in the eyes of the market? Well, it's probably something to do with the banks' half-year results that were released to investors this morning.
We already covered the substance of this report earlier today. This included a 45% increase in statutory profits to $22.94 billion.
But let's dig a little deeper into what ANZ announced in terms of its dividend. Just to start things off, let's note that the ANZ share price currently has a trailing dividend yield of 2.12%.
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What about ANZ's new dividend?
So, ANZ announced that its interim dividend for 2021 would come in at 70 cents per share, fully franked. This dividend will be paid out on 1 July, with an ex-date of 10 May. That is a substantial rise from both ANZ's last dividend and its previous interim dividend. ANZ paid out a final dividend of 25 cents per share, fully franked, in September last year. Before that, its previous interim dividend was 35 cents per share (also fully franked). That was paid out on 16 December 2020.
Before the pandemic, ANZ was paying out far higher dividends. Its annual dividend for 2019 consisted of 2 payments of 80 cents per share each (albeit one was only 70% franked). It also followed this pattern from 2016 to 2018, all fully franked.
So today's announcement of a 70 cents per share payout goes a long way in restoring ANZ's dividend to its former glory. It's also more of a restoration than what Westpac Banking Corp (ASX: WBC) announced earlier this week. But how much is it actually worth?
Well, if we take the newly announced interim dividend together with ANZ's last final dividend, we get an annual dividend of $1.05 per share. On the current ANZ share price, that would translate into a yield of 3.71%, or 5.3% grossed-up with full franking.
If we annualise the new dividend of 70 cents per share, we get a potential forward yield of 4.95%, or 7.07% grossed-up. That's starting to look like a yield that shareholders would expect of a big four ASX bank. It's also a bit larger than what Westpac's new dividend is worth on current pricing.
