Commonwealth Bank of Australia (ASX: CBA) shares are a popular choice among passive-income seeking investors.
It's not hard to see why.
The banking giant is the largest ASX bank on the Australian sharemarket, and the second-largest ASX 200 stock behind BHP Group Ltd (ASX: BHP) by market capitalisation.
CBA is a cyclical stock, but it has strong defensive qualities. Scarcity of quality stocks on the ASX also means investors tend to put major players, like CBA, on a pedestal. The bank's sheer size and market dominance means investors generally consider it a safe haven, even when markets are choppy.
CBA's huge scale and consistent operational performance have enabled the bank to pay regular passive income to its shareholders.
But what if you wanted to generate $12,000 of passive income from CBA shares every year? What exactly would that entail?
Let's investigate.
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What passive income does CBA pay its shareholders?
First, we need to understand what dividends the banking giant pays its shareholders.
CBA's huge scale and consistent operational performance have enabled the bank to generate a long history of paying regular fully-franked dividends in March and September every year, dating back to 1992.
Its latest payment was a fully-franked interim dividend of $2.35 per share in late-March.
Looking ahead, the bank is forecast to pay a total dividend of $5.15 per share to shareholders in FY26. It is then expected to pay around $5.45 per share in FY27.
At the time of writing, this translates to a forward dividend yield of around 3% for FY26. For FY27, the forward dividend yield is about 3.1%.
Ok, so how many CBA shares do I need to buy to generate $12,000 in passive income?
Assuming CBA pays the expected $5.45 per share dividend in FY27, investors would need to buy 2,201 shares in order to generate $12,000 per year in passive income.
How much would that cost?
At the time of writing, CBA shares are changing hands for $173.78 each.
This means that in order to buy the 2,201 shares needed for $12,000 of passive income, you would need to invest around $382,000.
That's certainly not a small amount of money. But it could be worth it in the long run.
Not only could investors earn a nice passive income every six months, but there is potential for capital returns too.
And also don't forget, that entire amount wouldn't need to be invested all in one go. Let compounding do some of the work for you.
