Owning Westpac Banking Corp (ASX: WBC) shares has been a useful choice for passive income over the last few years. We're going to look at whether the ASX bank share can provide investors with good payouts in the next few years.
There are two main factors that help Westpac provide investors with a pleasing dividend yield.
Banks usually trade on a lower price/earnings (P/E) ratio than other sectors, which helps the dividend yield compared to other sectors.
Westpac is also quite generous with its dividend payout ratio – it doesn't need to hold onto most of its profit to fund growth. It's already a big business.
Owners of Westpac shares will want to know about what the projected payout is for the ASX bank share are for the years ahead, so let's take a look.
FY26
The current financial year is FY26, so investors won't have long to wait for this annual dividend that I'm about to talk about.
Ideally, I'd like to see an ASX dividend share increase its payout each year to help people become wealthier and offset any inflation.
Using analyst projections from CMC Markets for the 2026 financial year, the ASX bank share is forecast to pay an annual dividend per share of $1.575, representing a year over year increase of 3% from FY25.
At the current Westpac share price, that would represent a grossed-up dividend yield of 5.8%, including franking credits.
FY27
The payout from the ASX bank share is forecast to increase again in the 2027 financial year, according to the projection on CMC Markets.
The projections suggest the ASX bank share could decide to increase its payout by another 1.6% year-over-year to $1.60 per share.
That's certainly not a huge projected increase, but an increase is better than no rise at all. It will help offset some of the likely inflation in 2026.
FY28
The final year of this series of projections is expected to be the best of all, if Westpac is able to continue increasing its earnings per share (EPS) slowly but steadily. Loan growth will be essential, as well as its ability to maintain its net interest margin (NIM) lending profitability.
According to the forecast on CMC Markets, Westpac is projected to hike its payout by another 3% in FY28 to $1.65 per share.
At the time of writing, that translates into a grossed-up dividend yield of 6.1%, including franking credits.
Broker UBS recently released a note that highlighted that possible rate increases in 2026 by the RBA could be helpful for the NIM and earnings of banks like Westpac. But, UBS is also wary of increasing competition in the lending space during 2026.
UBS has a neutral rating on Westpac shares, with a price target of $40, suggesting slight upside for the ASX bank share over the next 12 months.
