Commonwealth Bank (ASX:CBA) share price record high after dividend boost

The bank announced a 3.24% dividend yield and 3.5% reduction in shares on the market.

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The Commonwealth Bank of Australia (ASX: CBA) share price has hit a new landmark high.

At the time of writing, shares in Australia’s largest bank are trading for $107.31 – up 0.70%. At the open today, shares hit a record high of $109.03.

The positive price movement comes after the company released its full-year earnings results, a full-year, fully franked dividend of $3.50 per share, and a $6 billion off-market share buyback.

Let’s take a closer look.

Commonwealth Bank’s FY21 results

For the FY21 financial year, Commonwealth Bank declared a net profit of $8.8 billion. That’s up 19.7% on the prior corresponding period (pcp). Operating income rose 1.7% on the pcp to $24.2 billion but operating expenses were up 3.3% on the pcp to $11.4 billion.

As a result, the company announced a final dividend of $2.00 per share, fully franked. Added to the interim dividend paid of $1.50 per share, that equates to a full-year dividend of $3.50 per share. At the current CBA share price, this is a 3.24% yield.

In FY20, Commonwealth Bank paid a full-year dividend of $2.98, fully franked – a 4.0% yield at the time.

While today’s dividend announcement is a rise on the pcp, it is not a record. In FY19, for example, the company paid a full-year dividend of $4.31, fully franked.

As well, Commonwealth Bank will buy back about $6 billion worth (or 3.5%) of its shares in an off-market purchase.

CBA share price snapshot

Over the past 12 months, the CBA share price has increased 43.4%. Over the same period, the S&P/ASX 200 Index (ASX: XJO) rose 23.7%.

Commonwealth Bank has a market capitalisation of around $190 billion.

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Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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