Owners of Commonwealth Bank of Australia (ASX: CBA) shares may feel a little richer today because the dividend is headed your way.
CBA likes to send dividend payments to shareholders every six months, and this latest payout is the FY24 interim dividend for the six months to 31 December 2023.
Dividend details
For investors that didn't know, in the FY24 first-half result the CBA board of directors decided to declare a half-year payout of $2.15 per share. If someone owned 50 CBA shares, they would receive a fully franked payment of $107.50.
This payout was 2% bigger than last year's payment per share. It represents a dividend payout ratio of 72% of cash net profit after tax (NPAT). As a reminder, CBA's dividend policy is to target a full-year payout ratio of between 70% to 80% of cash NPAT. The payout ratio has been climbing since the worst of the COVID-19 pandemic – it was 68% of the first half of FY23 NPAT and 62% of HY22's NPAT.
The bank also said it was to maximise the use of its franking account by paying fully franked dividends and "sector leading cash dividends at sustainable levels".
The ASX bank share said it was expecting the dividend reinvestment plan (DRP) to be satisfied through the on-market purchase of shares.
CBA's balance sheet is in a strong position to be able to fund this dividend. Its common equity tier 1 (CET1) ratio was 12.3% at December 2023, up from 11.7% at December 2019 (pre-COVID).
Dividend reinvestment plan price
For investors that did take up the DRP, the DRP price is $117.19. This was calculated as the average of the daily volume weighted average market price of all CBA shares sold on the ASX during the 20 trading days between 26 February 2024 and 22 March 2024, with no discount.
The bank revealed that participation in the 2024 interim dividend was approximately 13.4% of CBA shares on issue.
CBA share price snapshot and payout projection
Over the last six months, the CBA share price has risen around 20%.
According to the (third party) projections on Commsec, the bank is expected to pay an annual dividend per share of $4.55 in both FY24 and FY25, which translates into a forward grossed-up dividend yield of 5.4%.
The dividend is then predicted to rise by 1.3% to $4.61 per share in FY26, which would be a grossed-up dividend yield of 5.5%.
