How does the ANZ dividend compare to the other ASX 200 banks?

ANZ is expected to pay a large dividend in FY22. How big will it be?

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Key points

  • ANZ is expected to pay a large dividend in FY22
  • It’s expected to be the biggest dividend yield compared to the other big four banks
  • ANZ is rated as a buy and is expected to keep growing its dividend in the next few years

The big four ASX bank Australia and New Zealand Banking Group Ltd (ASX: ANZ) is expected to pay a large dividend yield in FY22. But how big? And how does it compare to the other large banks?

ANZ is one of the largest banks in Australia and New Zealand, alongside Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd. (ASX: NAB) and Westpac Banking Corp (ASX: WBC).

How big is the ANZ dividend yield?

ANZ recently announced its FY22 half-year result. Continuing operations cash net profit after tax (NPAT) fell by 3% to $3.11 billion, while the cash profit before credit impairments, tax and ‘large items’ fell by 10% to $4.14 billion.

The ANZ board decided to pay a dividend per share of 70 cents, which was the same as the FY21 second half dividend.

According to Commsec, ANZ is forecast to pay an annual dividend per share of $1.44. That translates into a projected grossed-up dividend yield of 8.1%.

Citi is expecting ANZ to pay a slightly larger dividend than the Commsec prediction. The broker expects the projected grossed-up dividend yield to be 8.25% in FY22.

How large will the other big bank dividends be?

Citi’s numbers suggest that CBA is going to pay an annual dividend per share of $3.85 in FY22. That would be a grossed-up dividend yield of 5.4%.

Next, NAB is predicted to pay an annual dividend per share of $1.50, equating to a grossed-up dividend yield of 6.9% according to Citi.

Finally, Citi thinks that Westpac is going to pay an annual dividend per share of $1.23. That would translate into a grossed-up dividend yield of 7.3%.

Based on the above estimates, that means ANZ is expected to pay the largest dividend yield in FY22.

Are ANZ dividends expected to grow?

Commsec numbers certainly suggest there could be dividend growth for the next few years.

The forecast is an annual dividend per share of $1.55 in FY23 and then $1.65 per share in FY24. That would mean that ANZ could pay a grossed-up dividend yield of 8.7% in FY23 and 9.3% in FY24.

However, dividends are up to the discretion of the board, which can take into consideration things like profitability, the economic environment and how much capital the business has.

Is the ANZ share price a buy?

Citi certainly thinks so, with a buy rating and a price target of $30.75. That implies a potential rise of around 20%.

The broker thinks that increasing interest rates will help ANZ’s profit and dividend grow in the next couple of years.

In my own opinion, it’s hard to say how things will go for ANZ (and other banks). Rising interest rates are likely to be a positive, but competition could remain a headwind for margins and there is also a possibility that higher interest rates could lead to higher arrears.

Should you invest $1,000 in ANZ right now?

Before you consider ANZ, you'll want to hear this.

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The online investing service he’s run for over 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.

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Motley Fool contributor Tristan Harrison 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 recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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