Should you buy Westpac (ASX:WBC) shares in July for the dividend yield?

Is this banking giant in the buy zone for income investors?

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The big four banks continue to be very popular with investors. This is particularly the case for those in search of income in a low interest rate environment.

In light of this, I thought I would take a look at the Westpac Banking Corp (ASX: WBC) dividend and see what the market is expecting from Australia's oldest bank.

The Westpac dividend

The good news is that despite the Westpac share price rising an impressive 26% year to date, analysts still believe there are generous yields on offer in the future.

For example, according to a note out of Goldman Sachs, its analysts are expecting fully franked Westpac dividends of $1.16 per share in FY 2021, $1.24 per share in FY 2022, and then $1.32 per share in FY 2023.

Based on the latest Westpac share price of $24.76, this will mean yields of 4.7%, 5%, and 5.3%, respectively, over the next three years.

Goldman Sachs also has a buy rating and $29.03 price target on Westpac shares. This implies potential upside of 17% over the next 12 months. As a result, if you include the Westpac dividend, the total potential return stretches well beyond 20% for investors.

What else are analysts saying?

Analysts at Citi are positive on the Westpac share price and believe it is great value at the current level. They are also forecasting generous dividend yields in the coming years.

According to a recent note, the broker is forecasting fully franked dividends per share of 116 cents, 118 cents, and 132 cents through to FY 2023. This will mean yields of 4.7%, 4.75%, and 5.3%, respectively, over the forecast period.

And just like Goldman Sachs, Citi believes there's more to get excited about than just the Westpac dividend.

It has slapped a price target of $30.00 on the bank's shares. This will mean a potential return of approximately 21% for the Westpac share price over the next 12 months.

Motley Fool contributor James Mickleboro owns shares of Westpac Banking Corporation. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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