Will Commbank increase its dividend?

Analysts say shareholders could expect something more from our biggest bank.

Owen Raszkiewicz

Owen Raszkiewicz is a Motley Fool Contributor. Owen has been a Contributor since 2013, having also spent time as a Fool writer/analyst. He also worked as an Investment Analyst at Zenith Investment Partners, Australia's top research house specialising in managed funds. Owen has appeared on Channel 10's The Project and was invited on the BBC. He holds a Masters of Applied Finance, Masters of Financial Planning, Bachelor of Technology, Advanced Diploma of Financial Services and Diploma of Mortgage Broking Management. In addition, Owen has passed Level 1 of the Chartered Financial Analyst (CFA) Program. He has taken the Banking + Finance Oath (BFO). When he is not writing, Owen is Managing Director of Rask Finance, an Australian financial education company. You can email him: [email protected].

Published July 9, 2013 9:57 am AEST

Commonwealth Bank's (ASX: CBA) stellar profits are tipped to inspire the board to increase its payout to investors by an extra 30 cents. After substantially increasing its first half dividend to $1.64, analysts believe the full year dividend to June will come to around $3.64, compared to $3.34 this time last year.

With Commbank's profit expected to reach a new record high of approximately $7.6 billion, shareholders are demanding more. ANZ (ASX: ANZ) has also put pressure on Australia's biggest lender to cough up since upping its interim dividend by around 11% earlier this year.

The big four banks dividends are creating great yield plays for investors and lower prices pose a great opportunity for those looking to secure a stable long-term income.

However, Commbank is trading at much higher earnings ratio than its top four counterparts, which could mean that the markets expectations are weighing in on the stock. Compared to its peers, it currently has less growth in the near future and less dividend yield.

NAB (ASX: NAB) and Westpac (ASX: WBC) both sport dividends over 6% and will make great additions to investors' portfolios as 'core' stocks.

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Motley Fool contributor Owen Raszkiewicz owns shares in ANZ.

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