ANZ Group Holdings Ltd (ASX: ANZ) shares have long been a popular dividend pick. As one of the major ASX bank shares, the company benefits from significant scale and can deliver a strong dividend yield, supporting high passive income.
Banks usually trade on a relatively low price/earnings (P/E) ratio and have relatively high dividend payout ratios compared to other sectors, which is why they can deliver a solid dividend.
Of course, dividends are not guaranteed, so don't take any projections as certain. The payout could be lower, or higher, than expected. Let's take a look at what is projected of the ASX bank share and what that could mean for receiving $9,000 of annual passive income.
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Dividend projection
ANZ has been very consistent with its half-year dividend – ever since mid-2024 it has paid 83 cents per share every six months. That means its last 12 months of dividends come to $1.66 per share.
According to the projection on Commsec, the ASX bank share is projected to pay an annual dividend per share of $1.66 in FY26, the same as FY25 and FY24.
Looking further ahead to FY27, the annual dividend per share is also expected to be $1.66 again. On the one hand, that's pleasing stability. On the other hand, a flat dividend means inflation is eating away at the value of the dividend.
What would it take to generate $9,000 of passive income?
I'm sure many investors would like to receive $9,000 in annual passive income, whether from ANZ shares or another option. But this article focuses on ANZ shares.
As mentioned above, the ASX bank share is projected to pay an annual dividend of $1.66 per ANZ share, so to generate $9,000 of annual passive income, it would take 5,422 ANZ shares.
But, the above number doesn't take into account franking credits, which arguably should be included as it's part of the income package from Australian companies.
If franking credits are included, an investor would need only 4,104 ANZ shares to generate $9,000 in annual grossed-up dividend income.
Is this a good time to invest in ANZ shares?
Analysts don't think the valuation is particularly appealing right now. There have been eight ratings on the business within the last three months, with the average price target being $35.39.
That price target implies the experts collectively think, at the time of writing, that the ANZ share price will fall 7% over the next year.
It looks like there are better ideas to buy out there.
