Australia and New Zealand Banking Group Ltd (ASX: ANZ) shares offer investors not only the chance for share price appreciation but also provide a handy passive income stream.
ANZ shares edged lower over the course of the past week.
Shares in the S&P/ASX 200 Index (ASX: XJO) bank stock were swapping hands for $22.52 at market close on Friday.
At that price, ANZ shares trade at a fully franked trailing dividend yield of 6.5%.
Here's how I'd aim to garner $250 of passive income each month by investing in the bank's stock.
Aiming for $250 per month in passive income from ANZ shares
Over the past 12 months, the ANZ board declared a 72 cents per share interim dividend (paid on 1 July 2022) and a 74 cents per share final dividend (paid on 15 December).
That works out to a full-year dividend of $1.46 per share, fully franked.
So, to build my $250 of monthly passive income – or a handy $3,000 per year – I'd need to buy 2,055 ANZ shares. Which would give me an extra 30 cents.
Now there are two things to keep in mind.
First, with ANZ shares trading for $22.52 apiece, I likely won't be able to build my $250 in monthly passive income all in one shot.
But that's okay.
Investing is a long-term game.
If I can't buy them all in one go, I'd set up a budget and allot enough to buy maybe 20 shares a month. Eventually, I'll get to my goal.
The second thing to keep in mind is that we're talking about a trailing yield, which by definition is backwards looking. There are no guarantees ANZ shares will pay similar dividends in the future. Those may be higher or lower.
On that front, however, it's worth noting that the bank's full-year 2022 dividend payout was 4 cents per share higher than in 2021.
And there are reasons to believe it can continue to deliver a healthy yield.
Citi's analysts recently noted that "ANZ remains our top pick in the sector." The broker is forecasting growing dividends from the big four bank.
Its analysts expect ANZ shares will deliver $1.66 of fully franked dividends apiece in FY 2023. And Citi believes this will increase to $1.76 per share in FY 2024.
At the current share price that works out to a yield of 7.4% in FY23 and 7.8% in FY24.
Happy income investing!
