At first glance, buying ANZ Group Ltd (ASX: ANZ) shares today might seem like a no-brainer for those investors seeking high levels of dividend income.
For one, ANZ is one of the big four ASX 200 bank stocks. These have all been reliably paying out fat, and mostly fully franked, dividends for decades.
For another, ANZ is currently trading on the highest dividend yields out of the big four banks.
At current pricing, ANZ shares are seemingly offering a dividend yield of 5.05%. That's far higher than National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC), which are both on dividend yields under 4% at the moment. And ANZ's yield is not too far from double that of Commonwealth Bank of Australia (ASX: CBA), which is sitting on 2.88% today.
There is the caveat of ANZ's franking policy to take into account, of course. ANZ is the only member of the big four that does not habitually attach full franking credits to its dividends. To illustrate, the bank's last two payouts came partially franked at 70%.
But even so, ANZ's dividend yield is still at the top of the big four pack.
Or is it?
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Is ANZ's dividend heading for a cut?
ANZ has historically done a pretty good job of maintaining or increasing its dividends. The only times it has cut its dividend in the 21st century were during the global financial crisis in 2009 and during the pandemic in 2020.
Unfortunately, a few ASX experts reckon the bank's dividend is heading for another cut.
A report in the AFR this week quotes experts from both JPMorgan and MST. JPMorgan's Andrew Triggs has predicted that ANZ will cut its dividend to 76 cents a share at its upcoming earnings. He also predicts that the bank will scrap the rest of its $830 million share buyback program. This is thanks to the bevvy of corporate fines ANZ is facing, as well as the new direction that its fresh CEO, Nuno Matos, is taking ANZ in.
Similarly, MST's Brian Johnson described a dividend cut from ANZ as "inevitable".
If these predictions come to pass, it won't be too dire for income investors. If ANZ does pay a 76 cents per share dividend, it would give the bank an annualised yield of 4.64% at today's share prices. Even so, the bank's army of dividend-addicted shareholders might be in for a lot more uncertainty than they're used to over the coming months.
