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

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

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

Image source: Getty Images

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.

More on Dividend Investing

Woman calculating dividends on calculator and working on a laptop.
Dividend Investing

2 ASX dividend shares I'd buy for passive income that can last

For passive income investors, real-world infrastructure assets can be a useful place to look.

Read more »

A large clear wine glass on the left of the image filled with fifty dollar notes on a timber table with a wine cellar or cabinet with bottles in the background.
Dividend Investing

2 ASX shares with dividend yields above 9%

This seems like a great time to invest in these stocks for passive income.

Read more »

A man wearing glasses sits back in his desk chair with his hands behind his head staring smiling at his computer screens as the ASX share prices keep rising
Dividend Investing

$5,000 buys 194 shares in these 2 top ASX dividend stocks

Reliable dividends from essential infrastructure ASX companies.

Read more »

Oil worker using a smartphone in front of an oil rig.
Energy Shares

Buying Woodside shares? Here's the dividend yield you'll get today

Does this oil giant measure up for income?

Read more »

Middle age caucasian man smiling confident drinking coffee at home.
Dividend Investing

Want passive income? These 3 ASX dividend stocks could deliver

These defensive assets have a long history of paying a reliable passive income to their shareholders.

Read more »

A woman wearing a black and white striped t-shirt looks to the sky with her hand to her chin, contemplating buying ASX shares.
Dividend Investing

If I invest $5,000 in Wesfarmers shares, what passive income will I get in 2027?

Wesfarmers has a long history of paying a reliable dividend to its shareholders.

Read more »

Smiling elderly couple looking at their superannuation account, symbolising retirement.
Dividend Investing

Is this the perfect retirement dividend stock with a 7% yield and big upside?

This could be a must add equity.

Read more »

Australian dollar notes in the pocket of a man's jeans, symbolising dividends.
Dividend Investing

Get paid huge amounts of cash to own these ASX dividend shares

I’d love to buy these stocks for dividends!

Read more »