Westpac Banking Corp (ASX: WBC) shares are often seen as an option for generating income as an ASX dividend share.
The S&P/ASX 200 Index (ASX: XJO) bank share hasn't had a great time since interest rates started jumping higher in June. Since 6 June 2022, the Westpac share price has dropped around 10%.
However, one of the benefits of a lower share price is that not only could it mean the share is better value, but that the prospective dividend yield could be even higher.
How big will the Westpac dividend be?
Every analyst has their own expectation of how much the ASX 200 bank share is going to pay.
Estimates on CMC Markets suggest dividend growth for shareholders over the next few years.
In FY22, Westpac is expected to pay an annual dividend of $1.23 per share. That would translate into a grossed-up dividend yield of 8.2%.
The projections imply dividend growth of 7.3% in FY23 to an annual payment of $1.32 per share. This would be a grossed-up dividend yield of 8.8%.
More dividend growth is expected in FY24. The dividend could grow by almost 10% to $1.45 per share. In that case, it would translate to a grossed-up dividend yield of 9.7%.
Commonwealth Bank of Australia (ASX: CBA) is also expected to keep growing its dividend between now and FY24, according to CMC Markets. However, the FY24 grossed-up dividend yield from CBA is only expected to be 6.3%, so Westpac is expected to be a more lucrative source of dividends than CBA.
Is the Westpac share price a buy?
A business isn't necessarily a buy just because it pays a large dividend. But, with projected dividends that big, Westpac shares don't need to do too much for the bank to deliver satisfactory total returns.
Some brokers are very confident about the outlook for the Westpac share price.
Citi rates it as a buy with a price target of $29. That implies a possible rise of more than 30%. The broker pointed out that bad debts are still low and the asset quality is strong. It's also expecting the net interest margin (NIM) to keep rising over the next year.
While the broker UBS is currently neutral on the big bank, the price target of $26 implies a rise of around 20%. The bank may also report a credit release in the second half of FY22 thanks to its credit quality.
