ANZ Group Holdings Ltd (ASX: ANZ) shares are currently trading around $37.31.
The bank offers a solid dividend yield and a different earnings mix from some of its major rivals.
So, would I buy ANZ shares for passive income today?
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What income could ANZ shares provide?
According to CommSec consensus estimates, ANZ is forecast to generate earnings per share of $2.56 in both FY26 and FY27.
At the current share price, that places the bank on a forward price-to-earnings ratio of approximately 14.6 times.
I would not call that exceptionally cheap, particularly when analysts are expecting earnings to remain broadly flat. However, I think it is a reasonable valuation for one of Australia's largest banks.
The income looks attractive as well. Consensus forecasts are for dividends per share of $1.66 in both FY26 and FY27. That represents a forward dividend yield of approximately 4.4%.
I think it is worth remembering ANZ's recent dividends have been around 70% to 75% franked. That is lower than the fully franked payouts offered by some other major banks, but the franking credits could still increase the value of the income for eligible Australian investors.
Why I like the business
ANZ has a sizeable exposure to business and institutional banking, which together contribute almost half of its revenue.
That is one of the main reasons I would consider it. I like that these divisions give ANZ earnings drivers beyond Australian home loans.
Mortgage banking remains important, but competition is intense and rising interest rates and recent federal budget changes could negatively impact the housing market and home loan growth in the near term.
Further, strong business and institutional relationships can be deeper than with retail customers because clients may use several services and operate across multiple markets.
What are the risks?
Banks remain sensitive to the economy.
As I touched on above, higher interest rates can support lending margins, but they can also place more pressure on households and businesses. A rise in bad debts could weaken profits and make dividend growth harder.
In addition, the expected lack of earnings growth between FY26 and FY27 means there may be limited room for operational disappointments.
Foolish takeaway
Yes, I think ANZ shares are a buy for passive income investors.
The shares are not a bargain, but a forward earnings multiple of around 14.6 times looks reasonable to me. The forecast dividend yield of approximately 4.4% also provides a respectable level of income.
I particularly like ANZ's exposure to business and institutional banking, which gives it a broader earnings base than a bank relying heavily on mortgages.
For investors seeking a major bank with a decent yield and a fair valuation, I think ANZ shares are worth considering.
