Owners of Commonwealth Bank of Australia (ASX: CBA) shares will want to know about the latest CBA dividend, declared this morning with the bank's FY22 result.
CBA just released its report for the 12 months to 30 June 2022. The report included a number of different financial metrics for investors to study. For shareholders, one of the most important things to know is that the bank's cash net profit after tax (NPAT) increased by 11% year over year.
In early reaction to the result, the broker Macquarie said that the CBA net interest margin (NIM) decline was disappointing, according to reporting by The Australian.
Net profit is what funds the payment of dividends to investors.
Let's have a look at the latest dividend from the bank.
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CBA final FY22 dividend
CBA has declared a final dividend for FY22 of $2.10 per share. That represents an increase of 5% compared to the final dividend of FY21.
This brings the total FY22 dividend to $3.85 per share, an increase of 10% compared to FY21's payout.
CBA explains that the full-year dividend is supported by the bank's "continued capital and balance sheet strength". It wants to provide "strong and sustainable" returns to shareholders.
How did the bank decide on the payout?
CBA says it continues to target a full-year payout ratio of between 70% to 80% of cash net profit.
When considering what is a sustainable dividend, the board said it would continue to take into account a number of different factors, including long-term average loss rates.
The final dividend payout ratio was 68% of the bank's cash earnings, or 75% after normalising for long-run loan loss rates.
Both the FY20 and FY21 dividends were 71% of CBA's cash earnings.
What is the CBA dividend yield?
Based on the current CBA share price, the full-year payout for FY22 means that the 2022 financial year grossed-up dividend yield is 5.4%.
How big will the dividend be in FY23?
CBA didn't give any dividend guidance. It doesn't normally give guidance.
But, there are plenty of estimates out there.
Brokers may change their expectations for FY23 after seeing the FY22 report.
However, before the report, the estimate on CMC Markets was that CBA would pay an annual dividend of $4.10 per share in FY23.
At the current CBA share price, that translates into a grossed-up dividend yield of 5.8%.
Outlook
This is what CBA CEO Matt Comyn had to say about the outlook for the bank and the economy:
Against many measures, Australian households and businesses are in a strong position given low unemployment, low underemployment and strong non-mining investment. However, inflation is high, and we have seen a rapid increase in the cash rate which is negatively impacting consumer confidence. We expect consumer demand to moderate as cost of living pressures increase.
It is a challenging time, but we remain optimistic that a path can be found to navigate through these economic conditions. We remain of the view that the medium-term outlook for Australia is a positive one.
CBA share price snapshot
Over the last month, CBA shares have risen by over 8%.
