Westpac Banking Corp (ASX: WBC) shares have not only gained 28.5% over the past 12 months, they've also delivered shareholders some term deposit-beating passive income.
In fact, the most recent fully franked interim dividend the S&P/ASX 200 Index (ASX: XJO) bank stock delivered was the biggest payout since the pre-pandemic year of 2019.
So, how much passive income might I expect if I invested $20,000 in Westpac shares today?
We'll get to that in just a tick.
But first…
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Trailing yields and diversification
Before diving in, keep in mind that a proper passive income portfolio will contain a lot more than just one stock. While there's no magic number, 10 is a decent ballpark figure, ideally operating in different sectors and across various locations.
That kind of diversity will reduce the overall risk to your income portfolio.
Second, be aware that the yields you generally see quoted are trailing yields. Future yields may be higher depending on numerous company-specific and macroeconomic factors.
While we can look at forecast yields, these are just that. Forecasts. Sometimes they'll prove true. Sometimes they won't.
As for the future passive income on offer from Westpac shares, I do like the past four years growth trend. The ASX 200 bank's yearly dividend payouts have risen every year since 2020. And the interim dividend paid out in 2024 continues this growth pattern.
With that said…
Tapping Westpac shares for passive income
Turning to the past 12 months, on 19 December eligible Westpac shareholders will have received a fully franked final dividend of 72 cents per share. That was up 12.5% from 64 cents per share the prior year.
The interim dividend of 90 cents per share, also fully franked, will land in eligible shareholders' bank accounts next week, on 25 June. It's a bit too late to score that passive income payment, as Westpac stock traded ex-dividend on 9 May.
All told then, Westpac paid a total of $1.62 a share in dividends over the past year.
At the current share price of $27.15, the ASX 200 bank stock trades on a fully franked yield (partly trailing, partly pending) of 6.0%.
Getting back to our headline question then, how much passive income might I get if I invested $20,000 in Westpac shares right now?
Well, with $20,000 I could buy 736 Westpac shares today with enough change left over for a cheeseburger.
With 736 shares, I could then expect $1,192 in annual passive income from the big four bank, with potential tax benefits from those franking credits.
Of course, I'll also be hoping the Westpac share price continues to outperform.
