Can income investors bank on CBA growing its dividend yield by 18%?

The ASX's biggest bank is expected to bolster its dividends in 2023 and 2024.

Key points
  • CBA shares currently offer a near-3.6% dividend yield, having paid out $3.85 per share over the last 12 months
  • But that could be about to change 
  • The stock has been tipped to up its dividends to $4.55 per share in financial year 2024, leaving its yield 18% higher considering its current share price

Commonwealth Bank of Australia (ASX: CBA) shares are currently the lowest yielding of the big four, offering investors a mediocre 3.57% dividend yield. But could it be about to grow the passive income it hands to investors?

One expert thinks the biggest of the S&P/ASX 200 Index (ASX: XJO)'s big four banks could boost its dividends significantly in the coming years.

Indeed, it could be on track to grow its offerings by 18%, potentially boosting its yield along with them.

Right now, the CBA share price is trading at $107.65.

Let's take a closer look at what income investors might expect from CBA shares in the coming years.

A woman in a bright yellow jumper looks happily at her yellow piggy bank.

Image source: Getty Images

CBA's dividends tipped to soar

CBA shares might not be the big four bank income investors tend to turn to. Indeed, the giant's 3.57% yield is dwarfed by the likes of ANZ Group Holdings Ltd (ASX: ANZ) shares.

ANZ – which happens to be the smallest of the big four ­– currently offers a 5.89% dividend yield, the highest of its peers.

But CBA's dividends might be about to jump 18%, according to broker Morgans.

It tips the bank to offer $4.10 of dividends per share this financial year, as my Fool colleague James recently reported.

That's up from $3.85 per share last financial year and comprises a $1.75 interim payout and $2.10 final offering, both of which were fully franked.

And the financial year 2024 could bring even more dividend growth. Morgans forecasts CBA to declare $4.55 of dividends per share next fiscal year.

That would see the bank trading with a 4.22% dividend yield at its current share price – an 18.2% increase.

Are CBA shares a passive income buy?

With that in mind, could CBA shares represent a passive income buy right now?

Interestingly, Morgans had a hold rating on the stock in November. It slapped it with a $94.57 price target – representing a potential 12% downside.

Meanwhile, Jefferies is said to expect the CBA share price to slide 15% to trade at $91.30.

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 Jefferies Financial Group. 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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