The Westpac Banking Corp (ASX: WBC) share price has had a solid last 12 months, rising by more than 20%. However, one of the negatives of that is that it has pushed down the prospective dividend yield for new investors.
When the share price of a business climbs, new buyers won't get as much passive income for their investment dollars. For example, if a business has a 5% dividend yield and the share price rises 5%, the dividend yield becomes 4.55%.
Is the Westpac dividend yield attractive enough for income-seekers at the current Westpac share price? Let's take a look.
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Current passive income
The last two payments by the ASX bank share came to $1.52 per share.
At the current Westpac share price, the last 12 months of dividends come to a fully franked dividend yield of 4.6%, or a grossed-up dividend yield of 6.5%, including franking credits.
We've already seen the FY25 half-year result and the interim dividend, so I think it makes sense to consider what the payout for the 2025 financial year could be.
According to the forecasts on Commsec, the ASX bank share's FY25 annual dividend could be $1.53 per share, translating into a fully franked dividend yield of 4.6% and a grossed-up dividend yield of 6.6%, including franking credits.
Projected dividend payments
But, we shouldn't just look at what the dividend payment may be in FY25; the longer-term is important too.
How large will the dividend be in the coming years? The dividend declarations are up to the board of the company, but I'm going to highlight what analysts are projecting for the next financial year, FY26.
The FY26 annual dividend payment is projected to be $1.55 per share, which translates into a dividend yield of 4.7% and a grossed-up dividend yield of 6.7%, including franking credits.
Is the Westpac share price a buy?
That's not the biggest dividend yield on the ASX, so I wouldn't say the ASX bank share is a buy just because of passive income.
The share price gains of Westpac over the last 12 months have been impressive, but now it's more expensive and I wouldn't call it a buy. Lower interest rates could be a headwind for earnings because it reduces how much a bank can lend out deposits (like transaction accounts) which have a low (or no) interest rate for customers.
On the positive side, lower rates could mean that credit demand increases in Australia, which would be a major positive for Westpac's loan growth and earnings growth.
While Westpac is a solid ASX blue-chip share, it's not one of the first investments I'd make if I were targeting ASX dividend shares.
