Owning Westpac Banking Corp (ASX: WBC) shares usually means receiving a good level of dividend income each year thanks to a generous dividend payout ratio.
The more of its annual profit that a business pays as a dividend each year, the larger the dividend yield.
Another factor that helps deliver a larger dividend yield is that the business trades on a lower multiple of the earnings. This is called the price-earnings (P/E) ratio. The lower the P/E ratio, the larger the dividend yield.
We'll look at the P/E ratio of the Westpac share price later in this article.
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What is the Westpac dividend yield?
Rather than looking at past dividends, which have already been paid, I think it's more productive to focus on upcoming payments, since those are what will hit our bank accounts.
I'm going to look at the dividend projection for FY27, as that's Westpac's current financial year.
According to CommSec's forecast, the ASX bank share is projected to pay an annual dividend of $1.55 per Westpac share, with an implied dividend payout ratio of 72%. At the time of writing, that translates into a dividend yield of 4.25% excluding franking credits and 6.1% including franking credits.
I think it's important to include franking credits as part of the yield because it's included as part of the overall income package that Australians receive from Australian companies.
Is the ASX bank share a buy?
The latest investors have heard from the business was the FY26 third-quarter update for the three months to 30 June 2026. FY26 has already finished, but we haven't seen the result yet – it's due on 2 November 2026.
In that FY26 third-quarter update, Westpac said that it generated statutory net profit of $1.8 billion for the quarter, up 3% compared to the quarterly average of the FY26 first half. Excluding notable items, the net profit was $1.8 billion, up 2% compared to the quarterly average of the FY26 first half.
Westpac noted that many households are feeling the impact of cost-of-living pressures. The undersupply of housing combined with population growth is expected to partially offset the impact of higher interest rates and recent Federal Government policy changes on the housing market.
In August, Westpac outlined expectations that housing credit growth would be 4.7% in FY27, down from 6.8% in FY26, but still positive.
In terms of expert analyst views, brokers are leaning negative on the ASX bank share at the moment.
According to the earnings projection on CommSec, the Westpac share price is valued at 17 times FY27's estimated earnings, which is lower than Commonwealth Bank of Australia (ASX: CBA) and similar to National Australia Bank Ltd (ASX: NAB) and ANZ Group Holdings Ltd (ASX: ANZ).
According to CMC Invest, there have been eight ratings calls on Westpac shares within the last three months. Five of those analyst ratings were a sell, two ratings were a hold, and just one rating was a buy.
The average price target of those eight ratings was $34.03. That implies a possible decline of around 7% over the next year, at the time of writing. With a prediction like that, it doesn't seem like Westpac shares are the best opportunity on the ASX right now, even if it has a solid dividend yield.
