Most investors who own Commonwealth Bank of Australia (ASX: CBA) shares probably do so, at least in part, for the dividend income potential that this ASX 200 bank offers. Like most ASX bank shares, CBA has a well-founded reputation as a generous dividend income payer. Investors have been enjoying the passive income that CBA is known for for decades now.
But someone who is looking at CBA shares today might wonder just how much passive dividend income CBA shares are good for in 2023. So to answer that, let's discuss how many CBA shares you'd have to buy (and how much you'd have to spend) to secure a $3,000 annual dividend income stream from the bank today.
Let's start at the beginning. Over the past 12 months, CBA shares have paid investors a total of $4.50 in fully franked dividends per share. That figure comes from the March interim dividend of $2.10 per share, as well as the recently announced final dividend of $2.40 per share.
Although this latter payment has yet to hit investors' bank accounts (circle 28 September in your calendar, CBA shareholders), we'll use it since the CBA share price has already traded ex-dividend for this payment.
Both of those dividends represent healthy increases over 2022's interim and final dividends of $1.75 and $2.10 per share respectively.
How many CBA shares does it take to get $3,000 in passive dividend income?
Thus, we'll use an annual figure of $4.50 in dividend income per share to work this out. If every CBA share gives its investors $4.50 worth of dividend income per year, one would need to own 667 CBA shares to expect an annual passive income stream of $3,000.
Today, buying 667 CBA shares would set an investor back $67,387.01 at Tuesday's closing price of $101.03.
That $3,000 income stream would then represent a dividend yield of 4.47% at the current CBA share price.
However, this all assumes the CBA dividend will stay at least its current 2023 levels over the next 21 months.
Remember, CBA's interim dividend for 2023 has already been paid, and the shares have gone ex-dividend for the final dividend. So for our investor with 667 shares to actually receive $3,000 in dividend income over the next 12 months, CBA has to at least maintain its 2023 dividends in 2024.
There is nothing stopping the bank from trimming its dividend next year. While this is by no means guaranteed, investors also shouldn't count on a maintained dividend, or a raise. Anything is possible on the share market.
To be fair, CBA has a fairly impressive record when it comes to dividends in the post-COVID world though. The bank has increased its annual payouts every year since 2020, culminating in the $4.50 in dividends per share we will see this year. In fact, this year will actually be a new record for annual dividends from Commonwealth Bank.
No doubt investors will hope for another record in 2024. But we'll have to wait and see.
