Which of the ASX banks offers the highest dividend yields for income investors today? It's a vexing question to be sure, made even more so by the events of 2020.
If you cast your mind back to 2019, you may remember that the big four ASX banks weren't exactly making their income-focused investors too happy then either. National Australia Bank Ltd (ASX: NAB) reduced its long-standing 99 cents per share biannual dividend to 83 cents per share last year. It was a similar story at Westpac Banking Corp (ASX: WBC), which cut its own longstanding payout of 94 cents a share to 80 cents for 2019's final dividend. And Australia and New Zealand Banking Group Ltd (ASX: ANZ) cut the level of franking its investors were entitled to on their shareholder payouts. Only Commonwealth Bank of Australia (ASX: CBA) shareholders escaped 2019 without a reduction in dividends or franking credits.
But fast forward again to 2020, and the situation is far more dire for ASX bank shareholders. 2020 has seen dividends all but dry up from the big four – which is a big deal considering many (possibly most) investors who buy bank shares do so for the dividends.
So what exactly have the big four paid out in 2020? Well, it's worth noting that the Australian Prudential Regulatory Authority (APRA) mandated dividends be more or less curtailed between April and June, and capped at a maximum of 50% of earnings afterwards. There have been recent rumblings of this cap being removed, but we'll have to wait and see if that comes to fruition.
What dividends have been paid by ASX bank shares in 2020?
So, CBA shareholders were lucky enough to receive their 2020 interim dividend before the coronavirus crisis kicked off. March saw an interim dividend of $2 a share paid out to CBA shareholders. This was complemented by CBA's final dividend of 98 cents per share that was paid out on 30 September.
So based on the current CBA share price of $81.49 (at the time of writing), this dividend equated to a trailing yield of 3.66%.
But what of the other banks? Well, Westpac is the only big four bank that didn't end up paying an interim dividend at all in 2020. Westpac shareholders will get just one payout, a 31 cents per share final dividend that will hit bank accounts on 18 December. That gives Westpac a trailing dividend of 1.5%, which would equate to a 3% forward yield if we assume Westpac pays another two dividends of 31 cents per share each in 2021.
ANZ did pay two dividends in 2020 – an interim payout of 35 cents per share and a final dividend of 25 cents per share. That would give ANZ shares a trailing yield of 2.56% on current prices.
Finally, let's look at NAB. NAB's dividends have been consistent in 2020 – it has paid out two dividends of 30 cents per share each. That means this ASX bank offer a trailing yield of 2.54% based on the current NAB share price.
Foolish takeaway
On the raw numbers, it seems CBA shareholders have done the best in terms of receiving dividend income in 2020, as well as just on a pure 'trailing yield' basis. However, investors should keep in mind that CBA was the only bank lucky enough to cough up a 2020 dividend before the coronavirus pandemic really got going. As such, it's not really a fair 'apples-to-apples' comparison here.
