Income investors are likely aware ANZ Group Holdings Ltd (ASX: ANZ) shares have delivered the biggest dividend yield of the S&P/ASX 200 Index (ASX: XJO) big four banks for some time.
And its notable payout ratio could be set to grow.
Right now, shares in ANZ are trading for $23.72, leaving the stock with a 6.15% trailing dividend yield.
Coming in second best in terms of dividends among ASX 200 big four banks is Westpac Banking Corp (ASX: WBC). It offers a 5.35% trailing yield.
Looking ahead, however, one broker is tipping ANZ to grow its dividends by another 20%. Here are all the details.
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Could ANZ shares really offer $1.76 of dividends in FY24?
ANZ shares could be a passive income buy, if Citi's forecasts for dividends of the smallest big four bank are accurate.
The broker is tipping the bank to grow its dividends to $1.76 per share in financial year 2024, my Fool colleague James recently reported.
That's up from $1.46 per share last financial year, consisting of a 72-cent interim dividend and a 74-cent final dividend.
If Citi's forecast bears fruit, ANZ could boast a 7.4% dividend yield next year considering its current share price. Though, the broker is tipping the stock's value to grow as well.
It has slapped ANZ shares with a buy rating and a $29.25 price target – a potential 23% upside. At this price, $1.76 of dividends per share would represent a 6% yield.
The broker likes the bank's net interest margin (NIM), saying rising interest rates could lead to higher earnings.
However, Goldman Sachs isn't nearly so bullish. It's neutral on ANZ shares, tipping them to trade at $26.25 – representing a potential 11% upside.
It's also forecasting ANZ's dividends to reach $1.58 in the coming years.
That would see the banking share offering a 6.7% yield at its current price and a 6% yield at the broker's forecasted price.
In a less positive note, Goldman Sachs tips earnings benefits born from rising NIMs to wane from financial year 2024, while costs aren't expected to abate.
