Everything you need to know about the Westpac dividend

It's almost payday for shareholders.

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Owners of Westpac Banking Corp (ASX: WBC) shares will soon be getting their FY23 final dividend payment after the bank released its FY23 report.

It was a successful period for the ASX bank share – the business reported a 26% increase in net profit after tax (NPAT) to $7.2 billion. Its net interest margin (NIM) improved 2 basis points (0.02%) to 1.95% amid the higher interest rate environment and its loans increased by 5% to $773 billion.

Westpac dividend grows again

The Westpac board decided to declare a final dividend of 72 cents per share, which represented an increase of 12.5% compared to the FY22 final dividend.

This brought the full-year dividend to $1.42 per share, which represented an increase of 14% on the prior corresponding period.

Westpac reported that its earnings per share (EPS) went up by 28% to $2.05. Using that metric, the bank has decided on a dividend payout ratio of approximately 69%.

However, it's also launching a $1.5 billion share buyback, so shareholders are getting an even greater return, though that's coming from the excess capital it's holding on the balance sheet.

How big is the dividend yield?

A dividend yield is decided by the size of the dividend and the share price.

At the current Westpac share price of just over $22, the annual $1.42 dividend per share payout represents a cash dividend yield of 6.4% and a grossed-up dividend yield of 9.1%.

Despite the much higher interest rate environment, Westpac shares still offer a much better yield compared to the term deposits on offer.

When will this be paid?

Westpac shares will go ex-dividend on 9 November 2023, which means that investors only have until the end of trading on 8 November 2023 – this Wednesday – to invest in the ASX bank share to gain entitlement to the upcoming dividend.

The payment date is a bit further away, it's on 19 December 2023. So, in less than a month and a half owners of Westpac shares will get their dividend.

If investors want to take part in the dividend reinvestment plan (DRP), where they get new shares rather than a cash payment, the DRP election date cut-off is 13 November 2023 at 5pm.

Westpac share price snapshot

Since the start of 2023, the Westpac share price has fallen over 2%, while the S&P/ASX 200 Index (ASX: XJO) has risen by 0.8%.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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 Scott Phillips.

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