If you invest $8,000 in Bank of Queensland shares, here's how much passive income you'll get

This ASX bank offers the highest dividend yield among its peers right now.

| More on:
Happy couple enjoying ice cream in retirement.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

After wobbling their way through 2023, ASX bank shares have been on a tear this year. Why?

Well, when the investment world is dominated by inflation and interest rates, one offer remains attractive: earning passive income from dividends.

ASX bank shares? They can be fortress-like dividend payers.

One name worth noting is Bank of Queensland (ASX: BOQ). According to its latest filings, the company serves around 1.4 million customers and has a 2.73% share of the Australian residential mortgage market.

The Bank of Queensland share price has lagged the broader ASX 200 Banks Index (ASX: XBK), which has advanced 8.4% since January.

Other ASX bank shares, such as Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group Ltd (ASX: ANZ), have also outperformed the Bank of Queensland share price in 2024.

But you shouldn't look away yet.

Bank of Queensland currently offers us the highest dividend yield out of all the banking majors. As far as investment goes, this is a unique point.

Created with Highcharts 11.4.3Bank of Queensland PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

What is the Bank of Queensland dividend yield?

Bank of Queensland shares were swapping hands at $5.86 apiece recently, producing a trailing dividend yield of 6.5%. For context, the dividend yield on iShares Core S&P/ASX 200 ETF (ASX: IOZ) at the time was 3.63%, nearly 1.8 times smaller.

This is the highest yield among the banking majors. By comparison, CBA and NAB currently offer yields of 3.9% and 6.1%, respectively. Here's a recent snapshot.

ASX Bank shares dividend yield

CompanyRecent share priceTrailing dividendCurrent dividend yield
Bank of Queensland Ltd$5.86$0.386.5%
Bendigo and Adelaide Bank Ltd$9.76$0.626.4%
ANZ Group Holdings Ltd$28.48$1.756.1%
Westpac Banking Corporation$26.42$1.425.4%
Commonwealth Bank of Australia$115.23$4.553.9%
Macquarie Group Ltd$183.83$7.053.8%
National Australia Bank$34.40$1.674.9%
Group average — $2.495.3%

What this means is that a $1,000 investment in Bank of Queensland stock would theoretically produce $65 of annual income to the investor. You simply multiply the investment by the yield to gain your dividend income.

An $8,000 investment would theoretically yield $520 of annual income if one were to invest in Bank of Queensland shares today ($8,000 times 6.% = $520.00).

We can't forget the effect of franking credits, either. The bank's most recent dividend was franked at 100%, bringing the full gross yield – that is, adjusted for franking credits – to 9.46% at the time of publication.

Can investors actually gain $530 in passive income from investing $8,000 in Bank of Queensland shares?

All this sounds great on paper. But this is the trailing dividend yield. For it to remain constant, the rate of dividends must continue going forward, and the share price mustn't creep too high.

For example, if the bank were to reduce its dividend to $0.35 per share today, the dividend yield would fall to 5.6%. The opposite is also true if it were to increase. See the table below.

ChangeDividend per shareYield at recent share price ($5.86)
Increase$0.508.55%
Same$0.417.01%
Decrease$0.355.98%

Just remember – companies pay dividends from their earnings. If profits are down, the dividend payment may be reduced.

So, if Bank of Queensland maintains its current annual dividend and the share price remains steady, investors could expect to earn $520 of income for every $8,000 invested in Bank of Queensland shares. If it doesn't? These figures will change.

Based on the company's track record, profits, and overall strength of the economy, it would be hard to see Bank of Queensland slash its dividend any time soon, in my best estimation.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Bendigo And Adelaide Bank and Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Dividend Investing

Man putting in a coin in a coin jar with piles of coins next to it.
Dividend Investing

Where I'd invest $5,000 into ASX dividend shares right now

These stocks are strong contenders for passive income.

Read more »

Woman relaxing on her phone on her couch, symbolising passive income.
Dividend Investing

Why I think these 2 ASX dividend shares are ideal for income investors

These businesses offer a lot for income seekers.

Read more »

A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer
Dividend Investing

Is the Suncorp share price a buy for passive income?

Investors could gain a lot of income from this stock.

Read more »

View of a business man's hand passing a $100 note to another with a bank in the background.
Dividend Investing

3 ASX dividend shares to buy with $10,000

Let’s see which shares brokers think are in the buy zone right now.

Read more »

Delighted adult man, working on a company slogan, on his laptop.
Dividend Investing

Why Macquarie predicts this high-yielding ASX 300 dividend stock is set to surge 32%

Macquarie expects some outsized returns from this ASX 300 dividend stock. Let’s find out why.

Read more »

A woman standing in a blue shirt smiles as she uses her mobile phone.
Dividend Investing

Buy Telstra and this ASX dividend stock for passive income

Macquarie thinks that these stocks could be top picks for income investors.

Read more »

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Dividend Investing

Analysts name the best ASX dividend stocks to buy this month

Let's see what they are saying about these income options.

Read more »

Australian dollar notes in the pocket of a man's jeans, symbolising dividends.
Dividend Investing

Buy these ASX dividend shares for 5% to 7% yields

Brokers think these shares could be top picks for passive income investors.

Read more »