How does the Commonwealth Bank (ASX:CBA) dividend compare to ASX bank shares?

How do payments from Australia’s largest bank stack up against the rest of the big four?

| More on:
A woman in a bright yellow jumper looks happily at her yellow piggy bank.

Image source: Getty Images

The Commonwealth Bank of Australia (ASX: CBA) dividend has been fairly reliable over the years. Regulatory intervention during the COVID-19 pandemic reduced payments temporarily, but things are looking up for income-focused shareholders.

Despite being a consistent earner for Aussie investors, how do distributions from Australia’s largest bank stack up against other ASX bank shares?

How the CBA dividend compares to ASX bank shares

The Aussie bank’s shares are currently trading on a 3.49% dividend yield prior to Monday’s open. That comes despite a number of different forecasts for what the CBA dividend will be.

Morgan Stanley recently estimated a $4.02 per share dividend in FY22, while Morgans is tipping a $4.28 dividend per share. Both of these figures represent growth over FY21 figures, with the current 3.49% yield translating to a $4 dividend forecast.

So, where does that leave CBA placed against the other big four ASX bank shares?

Australia and New Zealand Banking Group Ltd (ASX: ANZ) has the highest dividend yield among the big four. The ASX bank share is trading at a 3.83% yield prior to Monday’s open. That’s despite the ANZ share price climbing 19% higher so far this year.

Westpac Banking Corp (ASX: WBC) is the next cab off the rank. Westpac shares are currently trading at a 3.52% dividend yield with a 21.6 price to earnings (P/E) ratio.

CBA’s dividend yield does compare favourably to National Australia Bank Ltd (ASX: NAB). NAB shares are trading at a 3.29% dividend yield right now versus 3.49% for Australia’s largest bank. That doesn’t take into account NAB’s $2.5 billion share buyback, which will also return significant capital to investors.

NAB isn’t the only one with a share buyback program on offer. CBA is conducting an off-market buyback of up to $6 billion worth of shares to return surplus capital to investors.

Foolish takeaway

The CBA dividend has bounced back after a subdued run in FY20. It’s not the highest yield ASX bank share on the market, but it still represents a handy pay day in the current low-interest-rate environment.

Should you invest $1,000 in Commonwealth Bank of Australia right now?

Before you consider Commonwealth Bank of Australia, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Commonwealth Bank of Australia wasn't one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

Motley Fool contributor Ken Hall 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.

More on Bank Shares