The owners of Zip Co Ltd (ASX: ZIP) shares have seen their investment dive 50% since October 2025, as the chart below shows. This could be a good time to consider the attractiveness of the business and look at interesting projections of dividend payments in the years ahead.
The buy now, pay later (BNPL) business has been caught up in the sell-off of ASX growth shares, which has been particularly painful for businesses in the technology sector.
But, the more a company is beaten up, the bigger the rebound can be if it regains investor confidence.
Let's take a look at what's expected of Zip shares when it comes to dividends.
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FY26
Broker UBS recently noted some negatives that the business has faced over the last few months, which has caused share price volatile.
First, seven US state attorneys general launched an inquiry into BNPL.
President Trump also suggested there be a 10% interest rate cap on credit cards. But, the broker's analysts think this could be a positive for BNPL as reduced credit availability could drive consumers to BNPL. However, if BNPL fees are treated as interest, then the effective interest rate would be around 24%. But, UBS' US team think rate caps are unlikely to be implemented.
UBS said that, assuming rate caps are not implemented, it sees the fundamentals at Zip as "continuing to remain strong, presenting an attractive opportunity in the stock".
The broker forecasts that Zip's total transaction value (TTV) may have grown by 34% in the second quarter of 2025, with 46% growth in the US.
Zip's net bad debt is projected to be 1.63% in the first half of FY26, up from 1.34% in the fourth quarter of FY25.
For the first half of FY26, UBS is projecting that the business could generate cash EBTDA of $128 million, with forecast active customers of 4.77 million in the US and 2.03 million in ANZ.
FY26 as a whole is expected to see $1.38 million of revenue and $118 million of net profit. However, no dividend is expected.
FY27
Owners of Zip shares are expected to see the net profit of the business climb substantially in the 2027 financial year to $167 million. But, still no dividend is projected.
FY28
Excitingly, the 2028 financial year could be the first year that shareholders see a dividend per share paid out, which would be its first passive income payment. The broker is forecasting that the business could make $220 million of net profit in this year.
UBS forecasts that the BNPL business could deliver an annual dividend per share of 9 cents. At the current Zip share price, that translates into a dividend yield of 3.8% at the current Zip share price. If it were fully franked, the grossed-up dividend yield would be 5.4%, including the franking credits.
FY29
Analysts are expecting the company's net profit to continue climbing in FY29 to $274 million, which would be pleasing ongoing growth.
However, the company is projected to deliver another dividend of the same level of 9 cents per share, which would translate into the same dividend yields I calculated in FY28.
FY30
The BNPL business could have the best year of this series of projections in FY30, according to UBS' forecasts.
The broker currently suggests that the business could pay an annual dividend per share of 20 cents. A lot could happen between now and then – UBS is forecasting the business could generate $350 million of net profit in FY30.
At the current Zip share price, that potential payout could be a cash dividend yield of 8.4%, or 12% grossed-up for franking credits.
UBS has a buy rating on the business, with a price target of $5.20, suggesting it could more than double within the next year.
