Working out how many ANZ shares you need to generate $8,000 of annual passive income is an important exercise.
The bank currently yields 4.38% on a share price around $38.
That sounds modest.
Once franking credits are included the picture changes considerably, and so does the amount of capital required.
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The maths behind $8,000 from ANZ shares
ANZ Group Holdings Ltd (ASX: ANZ) has paid 166 cents per share over the past twelve months.
That comprises an 83 cent final dividend franked at 70%, paid last December, and an 83 cent interim dividend franked at 75%, paid on 1 July.
Divide $8,000 by $1.66 and you need 4,820 shares.
At $37.93 each, that is an investment of roughly $182,800.
What franking credits change
The calculation looks quite different at tax time.
At 75% franking and a 30% company tax rate, each dollar of dividend carries about 32 cents of franking credit.
That lifts the grossed-up dividend to roughly $2.19 per share.
On that basis you need about 3,650 ANZ shares, or an investment near $138,300.
The franking credits have saved you more than $44,000 of capital.
Whether you actually receive that benefit depends on your marginal tax rate, and retirees in pension phase capture the most of it.
Can ANZ keep paying it?
This is the important question to ask for long-term investors.
The half-year result to 31 March delivered cash profit of $3.78 billion, up 14% on the prior half excluding significant items.
Cash return on tangible equity improved 161 basis points to 11.6%, and the cost-to-income ratio fell from 54.6% to 49.4%.
Common equity tier one capital was 12.39%.
On top of this, the August quarterly update was steady rather than spectacular.
Cash profit was $1.90 billion, up 1% on the first-half quarterly average.
Net interest margin edged up one basis point to 1.54%, and capital strengthened again to 12.51%.
The individual credit impairment charge was just $65 million, or three basis points annualised.
Chief executive Nuno Matos kept the message simple:
Our balance sheet and capital position remain strong, and we are staying close to our customers should they need support.
The risk with ANZ shares
Two risks deserve attention before investors commit $138,000 to a single bank.
The first is regulatory.
APRA raised ANZ's capital add-on to $1 billion in April 2025 alongside a court enforceable undertaking over non-financial risk management, and that overlay has not been removed.
The bank also booked a NZ$125 million provision for a New Zealand class action in the third quarter.
The second is concentration.
Suncorp Bank integration is 57% complete and the single customer front-end is 45% complete, both on schedule, but integrations are where banks tend to find unpleasant surprises.
Foolish takeaway
ANZ shares can produce $8,000 a year, and the capital required is either $182,800 or $138,300 depending on whether franking credits count for you.
I would treat the grossed-up number as the realistic one for most Australian investors.
What I would not do is build the whole income stream from a single bank on a price-to-earnings ratio above 19.
Allocating the same capital across three or four payers yields a little less but removes a great deal of risk.
