Here's the Westpac dividend forecast through to 2027

Will the big dividends continue for shareholders of this banking giant?

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Person handing out $50 notes, symbolising ex-dividend date.

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Westpac Banking Corp (ASX: WBC) shares were in the spotlight last week when Australia's oldest bank released its eagerly anticipated half year results.

For the six months ended 31 March, Westpac reported a net profit before one-offs came in at $3,506 million.

This is an 8% decline on the prior corresponding period but a far more modest 1% reduction on the second half of FY 2023.

Despite the softer profits, the Westpac board decided to reward its shareholders with a dividend increase. The bank declared a fully franked interim dividend of 75 cents per share, which is a 7.1% increase on the prior corresponding period.

But the Westpac board didn't stop there. Thanks to its strong balance sheet, it added a surprise 15 cents per share special dividend into the mix, as well as an additional $1 billion on-market share buyback.

Unfortunately for income investors, Westpac's shares have now traded ex-dividend for both its interim dividend and special dividend. This means it is too late to receive these payouts unless you were a shareholder before the ex-dividend date.

But don't worry, there are more dividends on the way. But how big will they be? Let's take a look at what analysts are forecasting for the Westpac dividend following this result.

Westpac dividend forecast

According to a note out of Goldman Sachs, its analysts have lifted their Westpac dividend estimates in response to its half year results.

The note reveals that Goldman now expects a fully franked $1.65 per share dividend in FY 2024. Based on the current Westpac share price of $26.66, this equates to a 6.2% dividend yield.

Looking ahead, the broker now expects a $1.50 per share fully franked dividend in FY 2025. This is up from its previous estimate of $1.44 per share and represents a 5.6% dividend yield.

It is the same story in FY 2026, with Goldman now expecting another $1.50 per share dividend instead of $1.44 per share previously. This will mean another attractive 5.6% dividend yield for income investors that year.

This trend is expected to continue in FY 2027, with its analysts pencilling in another $1.50 per share fully franked dividend. This of course represents a third consecutive 5.6% dividend yield for investors to look forward to.

Overall, the outlook for the Westpac dividend has improved since the release of the bank's results and above-average yields are on the cards for the foreseeable future.

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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