One of the most popular options for income investors on the Australian share market is the Commonwealth Bank of Australia (ASX: CBA) dividend.
Whether you own shares directly or indirectly through your superannuation, you're likely to be among the millions of Australians that collectively receive billions from the banking giant each year.
In light of this, readers may be wondering what rising interest rates mean for the CBA dividend in 2023.
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How big will the CBA dividend be in 2023?
As a reminder, Australia's largest bank paid fully franked dividends of $3.85 per share in FY 2022, up from $3.50 per share a year earlier.
The good news is that analysts expect the CBA dividend to increase again in 2023.
For example, according to a note out of Morgans, its analysts are forecasting a fully franked dividend of $4.10 per share. This represents a 6.5% increase year on year.
Based on the current CBA share price, this will mean an attractive 4% dividend yield.
Morgans then expects the CBA dividend to increase by an even greater 11% to $4.55 per share in FY 2024. This represents a 4.4% dividend yield based on its current share price.
Buybacks
Another bonus for shareholders that could be on the horizon is potential share buybacks.
Morgans expects the bank to have $6 billion of surplus capital to play with in FY 2024 and FY 2025. It commented:
CBA expects to operate with a post-dividend CET1 ratio of >11% under APRA's new framework from January 2023. We estimate CBA will produce c.$6bn of surplus capital over coming years from which it can undertake further buybacks across FY24-25F (in addition to completion of its current $2bn buyback program).
