The Westpac Banking Corp (ASX: WBC) share price has not been a star performer on the S&P/ASX 200 Index (ASX: XJO) of late. This big four ASX bank has lost more than 8% over 2022 thus far, as well as more than 21% over the past 12 months. That's including the nasty 1.31% drop Westpac shares have copped so far today, which puts the bank at $19.90 a share.
But when it comes to ASX banks, share price growth is arguably only a secondary concern for many investors. When it comes to the banks, more often than not, it's all about those dividends.
Westpac's sluggish share price performance in recent months has done wonders for its dividend yield. Westpac now sits at a trailing dividend yield of 6.08%. As is typical with the ASX banks, these dividends also typically come fully franked, which means that 6.08% grosses up to an even more eye-catching 8.69% when we account for those franking credits.
But is that as good as it gets for Westpac shareholders?
Will Westpac shares be offering a dividend yield of 7.8% in FY2023?
Well, perhaps not. As my Fool colleague James covered yesterday, broker Citi has been keeping an eye on Westpac. This ASX broker reckons Westpac is a buy today, with a 12-month share price target of $29. That implies a potential upside of more than 45% from current pricing.
But it's Citi's predictions over Wetpac's dividend where things get even more interesting. The bank's interim dividend for FY2022 came in at a fully franked 61 cents per share.
But Citi is expecting Westpac's final dividend for the financial year to be worth 62 cents. If that turns out to be the case, Westpac would have an FY2022 dividend yield of 6.18% based on current prices.
But Citi is also expecting Westpac to ramp up its dividends to $1.55 per share for the current 2023 financial year. If Westpac can pull that off, it would boost its forward dividend yield to a whopping 7.79% (or 11.13% grossed up) on current pricing.
This is by no means guaranteed, Westpac might not end up forking out $1.55 in dividends per share across FY2023. But if it does, income investors might have some hefty paycheques coming their way over the next 12-18 months.
