The ASX 200 bank share Bank of Queensland Ltd (ASX: BOQ) is not one of the major players, but it can offer just as good a dividend yield, if not better.
A dividend yield is decided by a combination of the company's dividend payout ratio and the price-earnings (P/E) ratio.
The banking industry is a competitive space, with numerous players including Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), ANZ Group Holdings Ltd (ASX: ANZ), National Australia Bank Ltd (ASX: NAB), Macquarie Group Ltd (ASX: MQG), Bendigo and Adelaide Bank Ltd (ASX: BEN) and Pepper Money Ltd (ASX: PPM).
How big will the ASX 200 bank share's dividend be?
No one can know what the dividends are going to be – shareholder payments are decided by the board of directors after considering the business' profit generation, capital requirements and cash balance.
BOQ's 2024 financial year is not far off from finishing, and we'll also look at the forecast dividend for the next few years.
The estimate on Commsec suggests BOQ could pay an annual dividend per share of 33.5 cents in FY24, which translates into a grossed-up dividend yield of 7.6%.
The 2025 financial year is the upcoming period, where it's projected to pay a dividend per share of 34 cents. That translates into a grossed-up dividend yield of 7.75%.
In FY26, the ASX 200 bank share is forecast to pay a dividend per share of 35.5 cents. This could translate into a grossed-up dividend yield of 8.1%.
Is the BOQ share price a buy?
The broker UBS thinks the ASX 200 bank share is a sell rather than a buy.
A price target is the broker's estimate of the share price 12 months from the time of the note. UBS currently has a price target of $5.50 on BOQ shares, which implies that the BOQ share price could fall by 12%.
The broker is negative on the business because of "downside risks" for the stock despite the valuation close to "trough multiples". UBS is worried about potential negative surprises related to costs or the net interest margin (NIM). However, there are also possible positives from potential acquisition activity and "bid premiums" or "capital return".
According to the UBS forecasts, BOQ is forecast to make $331 million in net profit after tax (NPAT) in FY24 and $356 million in NPAT in FY25. The BOQ share price is trading at 16x FY24's estimated earnings and 15x FY25's estimated earnings.
