For Australian income investors, the Commonwealth Bank of Australia (ASX: CBA) dividend is among the most popular options out there.
And that's for good reason. Australia's largest bank regularly shares a good portion of its profits with its shareholders.
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First quarter update
Last week, CBA released its first quarter update and revealed a 9% increase in income over the second half average to $6.6 billion and a 2% lift in cash earnings to $2.5 billion. This was driven by higher margins and volume growth, partly offset by reduced non-interest income.
Following this update, brokers have been busy adjusting their estimates for CBA's earnings and dividend for FY 2023 and beyond. Let's take a look to see what one analyst is saying.
Where is the CBA dividend heading?
As a reminder, the banking giant paid its shareholders a fully franked $3.85 per share dividend in FY 2022.
According to a note out of Morgans, its analysts are expecting this to increase by 6.5% to a fully franked $4.10 per share in FY 2023. Based on the current CBA share price of $105.82, this will mean a yield of 3.9% for investors.
The broker is then expecting an even greater rise in the CBA dividend to $4.55 per share in FY 2024. This equates to a fully franked 4.3% dividend yield for that financial year.
Interestingly, Morgans is expecting the bank's earnings and dividend to then take a small step backwards in FY 2025. This is based on its belief that "the NIM [net interest margin] uptick begins to fade and is outpaced by cost growth."
As a result, it has pencilled in a fully franked $4.50 per share dividend for FY 2025, which represents a 4.25% yield at current prices.
Overall, income investors appear likely to continue receiving attractive dividend yields from CBA's shares in the coming years. Though, it is worth remembering that a lot can change between now and 2025.
