ASX 200 bank stocks have always been known for their passive income potential. Chances are most retirees' dividend income portfolios you will see out there will have at least one of the ASX big four bank shares in it, and often more.
This reputation that bank shares have comes from decades of these companies paying healthy, fully-franked dividends to investors. But just because a share has done something in the past doesn't mean we can assume it will automatically keep doing it into the future.
So today, let's take a look at the ASX banks and see how their dividend chops stack up.
What kind of passive income can investors expect from ASX 200 bank stocks today?
First up we have the 'big daddy' of the ASX 200 bank shares, Commonwealth Bank of Australia (ASX: CBA). Like all ASX bank stocks, CBA pays out two dividends a year. Its last two payments were the final dividend of $2.10 per share, fully franked, that investors saw last September. Then there was the interim dividend, also worth a fully franked $2.10 a share, that was paid out just last month.
Both of these dividends represented big increases over the corresponding payments investors bagged across 2021 and 2022. As well as those received over 2020 and 2021. They give CBA shares a dividend yield of 4.24% at current pricing.
Next, let's look at National Australia Bank Ltd (ASX: NAB). NAB hasn't paid out a 2023 dividend yet. But its interim dividend of 73 cents per share for 2022, as well as the final dividend of 78 cents, were also both big increases over 2021's corresponding dividends. Both payments were fully franked too.
This gives the NAB share price a dividend yield of 5.41% right now.
What about Westpac and ANZ?
Westpac Banking Corp (ASX: WBC) is next up. This ASX 200 bank stock also dialled up its dividends across 2022, but not by quite as much compared to the other two banks we've looked at. 2021 saw Westpac dole out an interim dividend of 58 cents per share, fully franked, and a final dividend of 60 cents.
2022 saw these rise slightly, with the bank funding a 61 cents per share interim dividend, and 64 cents for the final dividend (both fully franked). This leaves Westpac with a dividend yield of 5.74% right now.
And finally, let's turn to ANZ Group Holdings Ltd (ASX: ANZ). ANZ's dividend trajectory resembles that of Westpac. This ASX bank forked out a fully-franked interim dividend of 70 cents per share in 2021, followed by a final dividend of 72 cents. 2022 saw these payments bumped up by 2 cents each, leaving them at a fully-franked 72 cents and 74 cents per share respectively.
This leaves ANZ shares with a dividend yield of 6.26% today.
So now the big question: is it a good time to buy ASX 200 bank stocks for passive income right now?
Time to buy the banks?
Well, it depends on an investor's goals, in my opinion. For investors who want to maximise returns without so much focus on dividend income, the outlook is cloudy.
But if your sole purpose for investing in ASX shares is to maximise passive income, dividends and franking credits, then I think any of the big four banks fits that bill nicely.
As we've demonstrated, you can get a fully-franked dividend yield of between 4% and 7% from the big four right now. And that will certainly come in handy for any income investor today.
Barring any catastrophic developments in the global financial system, I would expect these dividends to keep rising over the coming years as well. That's a view shared by many ASX brokers too.
So ASX 200 bank shares remain dividend powerhouses of the ASX. Thus, I see little reason why these veterans of our share market won't continue to grace the portfolios of retirees, pension funds and other income investors' portfolios going forward.
