Bendigo and Adelaide Bank Ltd (ASX: BEN) has one of the best dividend yields going around on the ASX.
The regional bank offers an attractive dividend yield of 5.03% which is higher than most of the major banks.
In contrast, Commonwealth Bank of Australia (ASX: CBA) has a dividend yield of 3.56%, while National Australia Bank Ltd. (ASX: NAB) stands at 3.82%.
However, with the first half of FY22 already wrapped up, it's time to look towards August's earnings season.
The Bendigo Bank dividend in a nutshell
In the first half of FY22, Bendigo Bank paid an interim dividend of 26.5 cents per share. That reflected an increase of 12.8% compared to the H1 FY21 dividend.
This came off the back of stronger cash earnings of $260.7 million in the first six months of FY22. The result was 19% higher than the prior corresponding period.
The H1 FY22 payout ratio stood at 57%, which is below the target range of 60% to 80% of cash earnings. However, management noted that it expects this to be in the low end of the range for the full year. This means there should be a slightly higher payout ratio for the second half.
So, what about the FY22 dividend?
According to Goldman Sachs, the broker is anticipating Bendigo Bank to maintain a final dividend of 26.5 cents per share.
It said that Bendigo Bank faces continued margin pressure with headwinds expected to moderate by end of the second half.
Nonetheless, despite near term revenue challenges, management is firmly fixed on a continued improvement in cost-to-income ratio. This financial metric came to 59.3% for the H1 FY22 period, slightly below the 60.9% reported year-on-year.
Bendigo Bank also registered a bad debt benefit of A$17.8 million, which accounted for 5 basis points of total loans.
Looking further afield, Goldman Sachs analysts are forecasting the company to pay a full year dividend of 54 cents in FY23. While this is similar to FY22's 53 cents, the dividend is expected to amplify to 70 cents in FY24. This translates to grossed-up dividend yields of 5.6% and 7.2%, respectively.
