Like the rest of the big four banks, the Westpac Banking Corp (ASX: WBC) dividend is a popular option for income investors on the Australian share market.
And it isn't hard to see why.
For over two decades, Australia's oldest bank has shared a good portion of its profits with shareholders each year.
Pleasingly, this trend continued in FY 2022, with the company rewarding its shareholders with a $1.42 per share fully franked dividend for the 12 months. This was an increase of 14% on what was paid out in FY 2022.
This equates to a total dividend payment of $5 billion, which is greater than the current valuation of regional rival Bank of Queensland Ltd (ASX: BOQ).
In fact, Westpac could have bought Bank of Queensland with its dividend and still had approximately $750 million of spare change.
But that dividend has since been paid and is now back in the economy. So, what's next for owners of Westpac shares? Let's take a look and find out what analysts are expecting from the big four bank.
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Westpac dividend forecast
As a reminder, Westpac paid out $1.42 per share fully franked dividend in FY 2023. Based on the current Westpac share price of $26.25, this equates to a generous 5.4% dividend yield.
Looking ahead, the team at Goldman Sachs has been running the rule over the bank's recent quarterly update and revealed that it believes Westpac remains positioned to increase its payout this year.
However, it won't be as big an increase as the year before. The broker has pencilled in a modest 1.4% lift in the Westpac dividend to $1.44 per share in FY 2024. This represents a fully franked 5.5% yield for investors buying at today's price.
Moving on, in FY 2025 the broker believes that the bank will be keeping its dividend flat at $1.44 per share again. This will mean another 5.5% dividend yield for shareholders.
And if you like consistency, you will appreciate that Goldman expects a third consecutive $1.44 per share fully franked dividend to be paid by Westpac in FY 2026. This will mean yet another 5.5% dividend yield from its shares.
But it is worth remembering that a lot can change between now and then for the better or for the worse. So, investors may want to use these forecasts as a guide for what could be coming and not take them as gospel.
