Major blue-chip shares like Commonwealth Bank of Australia (ASX: CBA) are a popular choice for investors seeking reliable passive income.
Bank stocks are generally considered cyclical rather than classically defensive, but large-scale banking giants like CBA certainly have defensive qualities.
Banking and credit are usually seen as an essential service. This means the sector can remain relatively stable in times of economic volatility.
As a result, banks like CBA are able to record a consistent operational performance and earnings, even when markets are mostly weak.
Another bonus is that the bank is huge, dominant, and highly profitable. This means investors generally consider it a safe haven when markets are unstable. Scarcity of quality stocks on the ASX also means investors tend to put major players, like CBA, on a pedestal.
Its huge scale has enabled the bank to generate a long history of paying a regular fully-franked dividend every year, dating back to 1992.
Generally, CBA has also raised its dividend over time as profits have grown, with the exception of periods of economic decline, such as the Global Financial Crisis in 2008-09 and during COVID-19.
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How many CBA shares can you get for $5,000?
At the time of writing, CBA shares are trading at $162.64 a piece.
That means that your $5,000 investment would buy around 30 of the ASX bank's shares.
What dividend does CBA pay its shareholders?
The banking giant pays its shareholders two fully-franked dividends per year, in March and September.
CBA most recently paid its shareholders an interim dividend of $2.35 per share, fully franked, in March this year.
Based on the latest forecasts, the bank is forecast to pay a total dividend of $5.15 in FY26. It is then forecast to pay shareholders $5.45 per share in FY27.
Based on the current share price of $162.64, that translates to a forward dividend yield of around 3.2% for FY26. For FY27, the forward dividend yield is closer to 3.4%, at the time of writing.
So, what's the estimated passive income for FY26 and FY27?
Using the estimated payout figures above, we can calculate roughly how much income to expect from a $5,000 investment in CBA shares.
If the banking giant pays the expected $5.15 per share in FY26, then your 30 CBA shares would generate a total of $154.50 in passive income.
Assuming the $5.45 dividend forecast for FY27 also comes to fruition, your 30 shares would generate an estimated $163.50 in passive income for the year.
Does that mean CBA shares are a good buy for passive income?
CBA shares are currently viewed as overvalued versus its peers. And if the highly anticipated share price correction actually happens, it could affect the amount of passive income paid to shareholders.
But keeping in mind that ASX bank stocks are cyclical investments, even a near-term decline could rebound in the mid-term. I personally think CBA shares are still a solid investment for passive-income-seeking investors.
