Westpac (ASX:WBC) share price is now trading on a forecast 3.5% fully franked dividend yield

What kind of yield are Westpac shares worth today?

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Along with pretty much the entire ASX banking sector, the Westpac Banking Corp (ASX: WBC) share price has been having a pretty decent month over August so far. Since the end of July, Westpac shares are up 5.14%, based on yesterday's closing Westpac share price of $25.78.

At this share price, Westpac is now offering a trailing dividend yield of 3.45%. That dividend comes fully franked, so this yield grows into 4.93% grossed-up with franking credits.

That yield figure comes from Westpac's last two dividend payments. They would be the final dividend of 31 cents per share that the bank paid out in December last year, and the interim payment of 58 cents per share that investors received back in June.

This is certainly heading in the right direction for investors. But it's also a stark reminder of what has happened to Westpac's dividends over the past 2 years. Back in 2019, this ASX bank was paying a biannual dividend of $1.88 a share (or two payments of 94 cents apiece).

That's a long way from the payments investors have enjoyed over the past 12 months. And remember, Westpac actually missed its interim payment in 2020, the only big four bank to do so. That was the first time Westpac hadn't paid two dividends in one year in decades.

The major ASX banks' dividends compared

A trailing dividend yield of 3.45% is a whole lot more in annual yield than you can expect from a Westpac savings account or term deposit these days (or any other ASX bank for that matter). But how does it compare to Westpac's rival ASX bank shares? Let's take a look.

On recent pricing, Westpac's current yield is pipped by Commonwealth Bank of Australia (ASX: CBA). CBA's dividend, which has been recently hiked, is now offering a yield of 3.49%, just squeaking in ahead of Westpac.

But what of National Australia Bank Ltd (ASX: NAB) or Australia and New Zealand Banking Group Ltd (ASX: ANZ)?

Well, at yesterday's closing price, NAB shares are offering a yield of 3.29%, slightly below Westpac. Meanwhile, ANZ shares are carrying a yield of 3.71%, which tops the major ASX banks. So Westpac's 3.45% is actually right in the middle of what the major banks are offering right now.

Will the Westpac dividend keep growing?

One broker who thinks there is a fair chance of this happening is investment bank Goldman Sachs. Goldman is currently rating Westpac shares as a 'buy' with a 12-month share price target of $29.93 a share.

But more pertinently, the broker is also forecasting Westpac to pay another 58 cents per share final dividend for FY21 (an FY21 total of $1.16 per share). Goldman is also forecasting this to increase to a total of $1.28 per share for FY2022 and $1.41 per share for FY2023.

That may not be back to the glory days of 2018, but it's certainly going in the right direction if Goldman's predictions are on the money.

At the current Westpac share price, this ASX bank has a market capitalisation of $94.5 billion.

Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank Limited. 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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