As with the rest of the big four banks, the Westpac Banking Corp (ASX: WBC) dividend is among the most popular options for income investors on the Australian share market.
For decades, Australia's oldest bank has shared a good portion of its profits with shareholders.
This continued in FY 2022, with the company recently declaring a final dividend of 64 cents per share, bringing its full year dividend to $1.25 per share.
Based on the current Westpac share price of $23.92, this represents a fully franked 5.2% yield for investors.
Where next for the Westpac dividend?
The good news is that one leading broker believes it is onwards and upwards from here for the Westpac dividend.
According to a recent note out of Goldman Sachs, it is expecting the bank to increase its dividend to a fully franked $1.48 per share in FY 2023. This will be a solid 18.4% increase year over year and equates to an attractive forward yield of 6.2%.
Goldman expects this positive trend to continue in FY 2024 and is forecasting another 7.4% increase to $1.59 per share. This represents another very attractive fully franked dividend yield of 6.65% for investors.
The broker's forecasts for the Westpac dividend end in FY 2025. For that year, once again, its analysts expect the banking giant to be in a position to increase its dividend.
In FY 2025, Goldman is expecting the bank to reward its shareholders with a fully franked $1.69 per share dividend, which will be an increase of 6.3% year over year. Based on where Westpac's shares trade today, investors would receive a generous 7.1% dividend yield.
Should you invest?
Based on the above, it would be hard to argue against Westpac shares being a great option for income investors with limited exposure to the banking sector.
Goldman Sachs certainly thinks this is the case. It currently has a conviction buy rating and $27.60 price target on its shares. This implies potential upside of 15% for investors over the next 12 months.
