Commonwealth Bank of Australia (ASX: CBA) has long been one of the most popular ASX dividend shares with income investors.
That is easy to understand. CBA is Australia's largest bank, has a huge mortgage book, a powerful retail banking franchise, and a long history of paying fully franked dividends to shareholders.
For many income investors, this combination has made the bank a core holding over the years. Its earnings are supported by millions of customers, a leading digital banking platform, and exposure to the Australian economy.
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The CBA dividend
CBA's dividend is by no means risk-free. Bank earnings can be influenced by credit growth, bad debts, funding costs, competition, interest rates, and regulatory requirements.
And when a share price runs hard, the dividend yield on offer can become less generous for new buyers.
So, how big could the CBA dividend be in 2027?
Consensus forecasts
Based on current market forecasts, CBA is expected to pay fully franked dividends of $5.15 per share in FY 2026.
After that, the market is expecting the banking giant to lift its dividend to $5.45 per share in FY 2027.
This means that, based on the latest CBA share price of $165.67, investors would be looking at a forward fully franked dividend yield of approximately 3.3% for FY 2027.
For comparison, the FY 2026 forecast dividend of $5.15 per share implies a yield of approximately 3.1%.
These yields are reasonable, particularly once franking credits are included. But they are not especially high compared to what investors have often been able to achieve from the big banks.
That reflects the strength of the CBA share price. When a dividend share trades at a premium valuation, the income return available to new investors naturally comes down.
Investors should also remember that these are only forecasts. If the economy weakens, bad debts rise, or margins come under pressure, CBA's future dividends could differ from current expectations.
Should you buy CBA shares?
That depends largely on whether investors are prioritising quality, income, or valuation.
There is no question that CBA is a high-quality business. It has the strongest retail banking franchise in the country, a major technology advantage over many rivals, and a track record that has earned it a premium from the market.
The challenge is the price. Unfortunately for would-be buyers, none of the major brokers currently have buy ratings on CBA shares. That suggests many analysts believe the stock is already expensive at current levels.
One of those is Morgan Stanley. Last week, the broker put an underweight rating and $130.00 price target on CBA shares. This implies potential downside of more than 20% from where CBA ended last week.
So, while CBA remains one of the highest-quality dividend shares on the ASX, its forecast FY 2027 yield of approximately 3.3% may not be enough to offset valuation concerns for some investors.
