The Westpac Banking Corp (ASX: WBC) dividend is a popular option for income investors.
The banking giant's shares feature in countless income portfolios and superannuation funds across the country.
But what sort of dividend yields are on the cards for shareholders in the near future? Will the bank be growing its dividend or is it now on a downward trajectory?
Let's see what analysts at Macquarie Group Ltd (ASX: MQG) are saying about the big four bank's payouts.
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Westpac dividend forecast
As a reminder, earlier this week Westpac released its half year results and reported a net profit of $3,317 million. This was down 9% on the prior period.
However, despite the softer profits, the Westpac board elected to keep its dividend flat from the prior half at a fully franked 76 cents per share. This is the equivalent of a $2.6 billion payout from the bank.
To put that into context, this is more than the market capitalisations of Domino's Pizza Enterprises Ltd (ASX: DMP) and Zip Co Ltd (ASX: ZIP). And there's still a final dividend to come later this year.
Speaking of which, according to a note out of Macquarie, its analysts believe that another 76 cents per share dividend is coming with its full year results, bringing the total dividends in FY 2025 to $1.52 per share.
Based on its current share price of $31.38, this equates to a fully franked 4.85% dividend yield.
What's next?
Unfortunately, after seeing its half year results, Macquarie has reduced its earnings estimates and brought forward its expectations of a dividend cut. It said:
We lower FY25E-FY27E NPAT by 1-2%, largely as a result of weaker volume growth. However, we raise diluted EPS ~1% due to reduced dilution driven by share price appreciation. We also brought forward the DPS cut into FY26E (previously in FY27E) due to capital constraints.
Macquarie is forecasting a fully franked dividend of $1.41 per share in FY 2026. This is down 7.2% year on year and would mean a dividend yield of 4.5% for investors based on its current share price.
Unfortunately, the trend is expected to continue in FY 2027, with Macquarie forecasting another dividend cut from the banking giant. The broker has pencilled in a fully franked dividend of $1.30 per share for the year, down a further 7.8% year on year and the equivalent of a 4.1% dividend yield.
Should you buy Westpac shares?
As you might have guessed from its earnings and dividend estimates, Macquarie isn't recommending the bank as a buy right now.
The broker has an underperform rating and $27.50 price target on its shares.
