Are ANZ shares really on track to offer a 7% dividend yield?

Citi is bullish on the ASX 200 banking favourite and its dividends.

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Key points
  • The ANZ share price and the company's dividends could be in for a good run if these top brokers are to be believed
  • Both Goldman Sachs and Citi responded well to the bank's recent full-year earnings 
  • The latter broker expects the stock could offer $1.76 per share in dividends in financial year 2024

Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares already boast the highest dividend yield of the S&P/ASX 200 Index (ASX: XJO) big four banking stocks.

And it could be set to grow its offerings, according to top brokers. Indeed, one tips the smallest big four bank to grow its dividends by 20% in coming years.

Right now, the ANZ share price is $24.09.

Let's take a closer look at what experts believe the future could hold for the banking share and its dividends.

A mature aged man with grey hair and glasses holds a fan of Australian hundred dollar bills up against his mouth and looks skywards with his eyes as though he is thinking what he might do with the cash.

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Could ANZ shares offer a 7% dividend yield in FY24?

The ANZ share price could be in for a good run in coming years, as could the banking stock's dividends, if these experts are to be believed.

Two top brokers have responded well to the bank's recent full-year earnings.

ANZ posted a $7.1 billion profit and $6.5 million of cash earnings from continuing operations for financial year 2022 in late October. Excitingly, it also revealed an exit net interest margin (NIM) of 1.8%.

Citi said such a NIM is "likely to drive material consensus revenue upgrades, and we think the street upgrades core earnings", as my Fool colleague James reports. Meanwhile, Goldman Sachs said:

Today's result suggested that while ANZ's NIM is likely to peak at higher levels than we previously forecast, this peak is also likely to come through earlier.

ANZ also offered investors a 74 cent per share final dividend, lifting its full-year offerings to $1.46 per share. That leaves the stock trading with a 6% dividend yield at the time of writing.

And that could be gearing up to grow. Citi tips ANZ to pay out $1.66 per share in financial year 2023 and $1.76 per share in financial year 2024.

At its current share price, a $1.76 full-year offering would see ANZ shares trading with a 7.3% dividend yield.

However, the broker also has a $29.25 price target on the stock. At such a level, $1.76 in dividends would see ANZ trading with a 6% yield.

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs. The Motley Fool Australia has no position in any of the stocks mentioned. 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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