The Australian share market is a great place to generate dividend income.
And one of the best areas of the market to do this has historically been the banking sector.
That's because the big four banks have a tendency of sharing a large amount of their profits with their loyal shareholders.
And with these banks generating billions in profits each year, this certainly isn't chump change.
For example, in FY 2023, Westpac Banking Corp (ASX: WBC) paid out a total of $5 billion across its fully franked interim and final dividends.
But these dividends have been paid. What about the future? Will Australia's oldest bank continue to line the pockets of its shareholders with big dividends?
Let's find out what a $20,000 investment in the banking giant's shares could generate in dividend income over the next 12 months and beyond.
Dividend income from Westpac shares
Firstly, if I were to invest $20,000 (and $14.83 extra) in the bank's shares at current prices, I would end up owning 759 units.
According to a note out of Ord Minnett, its analysts are expecting Westpac to increase its dividend by 2.1% to $1.45 per share in FY 2024.
If this proves accurate, my 759 units would generate $1,100.55 in dividend income over the next 12 months.
Looking to the following year, Ord Minnett is anticipating a further 3.4% increase to the Westpac dividend to $1.50 per share. This would generate dividend income of $1,138.50 from my 759 units.
But the returns don't necessarily stop there. The broker currently has an accumulate rating and $28.00 price target on the bank's shares.
If the Westpac share price were to rise to that level, my holding would have a market value of $21,252. That's approximately $1,250 more than I paid for the shares.
