If you don't already have exposure to the banking sector in your income portfolio, then now could be the time to do it.
That's because there are some very big dividend yields being forecast in the sector by analysts.
But which ASX 200 bank shares should you buy for dividends? Here are two that come highly recommended:
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ANZ Group Holdings Ltd (ASX: ANZ)
Following its half-year results, the team at Citi continues to believe that ANZ is the best big four bank share to buy now.
This is largely due to its institutional business, which Citi believes is the key differentiator between it and the rest of the big four. The broker said:
We see ANZ's unique capabilities as set to deliver relative outperformance in the current market conditions. ANZ is our preferred Major Bank exposure.
Citi currently has a buy rating and $26.50 price target on its shares.
As for dividends, Citi is forecasting fully franked dividends of 164 cents per share in FY 2023 and then 166 cents per share in FY 2024. Based on the current ANZ share price of $24.50, this will mean yields of 6.7% and 6.8%, respectively.
Westpac Banking Corp (ASX: WBC)
Over at Goldman Sachs, its analysts believe that Westpac is the ASX 200 bank share to buy. In response to its half-year results release, the broker has retained its conviction buy rating with a $24.67 price target.
Goldman was reasonably pleased with the results, noting:
WBC's 1H23 cash earnings (GS basis ex-notables) from continued operations were up significantly hoh and +8% above GSe.
And while Westpac unfortunately abandoned its cost cutting goals, the broker still expects flat expenses to drive outperformance. It adds:
[D]espite WBC walking away from its FY24E cost target of A$8.6 bn, we expect a broadly flat cost trajectory over the next two years, which will see WBC outperform peers in this relatively difficult inflationary environment.
In respect to dividends, Goldman now expects fully franked dividends of 140 cents per share in both FY 2023 and FY 2024. Based on the current Westpac share price of $21.09, this equates to yields of 6.6% in both years.
