Over the years, one of the most appealing features of being invested in ASX bank shares is the passive income – it usually forms a significant part of the overall return. Hence, the ANZ Group Holdings Ltd (ASX: ANZ) dividend yield could be appealing for investors.
ANZ is one of the biggest banks in Australia, alongside Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB), and Macquarie Group Ltd (ASX: MQG). Having a large scale gives the bank some useful advantages, such as, typically, access to cheaper funding than smaller banks.
ANZ's financial performance has been improving in recent times, with the FY25 half-year result (compared to the FY24 second half report) showing 5% growth of revenue to $11 billion, net profit before provisions up 6% to $5.25 billion, cash profit up 12% to $3.57 billion, earnings per share (EPS) up 13% to $1.20, and a 94 basis point (0.94%) improvement of the return on equity (ROE) to 10.2%.
The only integral statistic that didn't show a half-over-half improvement was the dividend per share, which was maintained at 83 cents per security. Is the bank's dividend expected to stay at this level for the foreseeable future? Let's take a look at what some analysts are expecting.
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ANZ dividend yield projection
It's quite possible the ASX bank share's payout in FY25 may be maintained at $1.66 per share. At the current valuation, that would translate into a grossed-up dividend yield of 6.4%, including the franking credits.
However, according to the forecast on Commsec, ANZ is projected to pay an annual dividend per share of $1.68 in the 2026 financial year.
At the current ANZ share price, that translates into a grossed-up ANZ dividend yield of 6.5%, including franking credits.
While that yield isn't as good as it has been in the past few years, that's largely because of the rising ANZ share price. In 2025 to date, the ANZ share price has gone up by more than 16%, as the chart below shows, which I'd describe as a strong performance for a large blue chip like ANZ.
Is this a good time to invest?
I'd prefer to invest when the ANZ share price is lower rather than higher, so the value isn't as appealing as it was at the start of the year right now
But, there are some positives to consider. First, the RBA rate cuts may increase demand for credit from prospective borrowers. That could be a useful tailwind for most/all lenders.
Second, the RBA rate cuts we've seen this year may mean that borrowers are able to handle their repayments more easily, leading to lower bad debts for the bank.
Finally, the bank may be able to improve its cost to income ratio and efficiencies, boosting its profitability.
Overall, ANZ shares are not at the top of my buy watchlist, but I'd prefer to own them over a term deposit.
