ASX bank shares have always had a reputation for fat, fully-franked dividend payments. For decades, scores of income investors have flocked to the ASX banks in search of high yields.
For the most part, bank shares have responded in kind, frequently offering investors appealing yields of 4, 5, or 6%. But let's have a closer look at ANZ Group Holdings Ltd (ASX: ANZ) shares.
ANZ is of course one of the big four ASX bank shares, albeit the baby of the stable. But although it's currently the smallest big four bank by market capitalisation, it also seemingly offers the highest dividend yield. If you look at the ANZ share price at market close on Monday, you will see that it apparently has a trailing dividend yield of almost 7% – 6.81% to be precise.
That comes fully franked too, so we can gross that already impressive yield up to an eye-catching 9.73%.
Sure, this yield is legitimate. But like all dividend yield figures, it is based on past dividend payments. In this case, we have ANZ's December final dividend of 74 cents per share, as well as the interim dividend of 81 cents that will be paid out early next month, to thank. These were pleasing increases from the previous interim and final dividends of 72 cents each.
But do ANZ shares rally offer a near-7% dividend yield for investors buying the shares today? For that to be true, the bank would have to at least maintain the dividends it has paid out over the last 12 months, over the coming year.
Are ANZ shares really offering a 7% yield to ASX income investors today?
If it delivers a lower amount, then ANZ's forward dividend yield will be lower than its trailing dividend yield. But if the opposite is true and ANZ raises its dividends, then its forward dividend yield will be even higher than the trailing yield on display today.
Of course, we can't know what kinds of dividends ANZ will pay out in the future until the bank reveals them. However, we can look to see what ASX experts are predicting might happen though.
Last week, my Fool colleague covered the views of ASX broker Citi on ANZ shares and, in particular, Citi's thoughts on ANZ's income future.
Citi gave the ANZ share price a buy rating, complete with a 12-month share price target of $26.50 a share. If realised, that would see an upside of more than 16% from where ANZ shares are as of Market close on Monday.
But, more pertinently, Citi also predicted that ANZ would be able to fork out a total of $1.64 in dividends per share for FY2023, rising to $1.66 per share for FY2024.
If that indeed comes to pass, it would see ANZ with a forward dividend yield of 7.21% and 7.3% respectively on the current ANZ share price of $22.77 (as at Monday's close).
So, if Citi's projections prove accurate, ANZ shares can indeed deliver investors a dividend yield of more than 7% going forward. No doubt that will be music to dividend investors' ears today. But we'll only know for sure when we see the next ANZ income payments as revealed by the bank.
