The final Westpac (ASX:WBC) dividend is being paid today. Here's what you need to know

Westpac is paying shareholders total dividends of $2.2 billion today…

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Today is payday for the shareholders of Westpac Banking Corp (ASX: WBC), with the banking giant planning to pay its final dividend of FY 2021 this morning.

Westpac dividend being paid today

At the start of November, Westpac released its full year results for FY 2021 and reported a 138% increase in statutory net profit to $5,458 million and a 105% jump in cash earnings to $5,352 million.

This was driven largely by a 144% increase in Business segment cash earnings to $1,789 million, which was supported by a more modest 12% increase in Westpac's Consumer business cash earnings to $3,081 million.

Together with its strong balance sheet, this allowed Westpac to announce a $3.5 billion buyback and declare a fully franked final dividend of $2.2 billion or 60 cents per share.

The latter brought its full year dividend to a total of 118 cents per share, which represents an increase of 280% over the COVID-impacted FY 2020 dividend and a payout ratio of 62%.

Dividend outlook

The good news for Westpac shareholders is that a number of brokers expect further dividend increases in the years to come.

For example, the team at Morgans has pencilled in a fully franked Westpac dividend of 123 cents per share in FY 2022 and then 162 cents per share in FY 2023.

Based on the current Westpac share price of $21.01, this implies very generous yields of 5.9% and 7.7%, respectively, for investors over the next two financial years.

Morgans also sees plenty of upside for Westpac's shares. It currently has an add rating and $29.50 price target, which suggests they could climb as much as 40% over the next 12 months.

The broker commented: "Westpac is our preferred major bank. While WBC stock is now being priced like it is a value trap, we do not believe it is a value trap."

Motley Fool contributor James Mickleboro owns Westpac Banking Corporation. 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 recommended Westpac Banking Corporation. 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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