Westpac Banking Corp (ASX: WBC) shares were in the spotlight last week when Australia's oldest bank released its eagerly anticipated half year results.
For the six months ended 31 March, Westpac reported a net profit before one-offs came in at $3,506 million.
This is an 8% decline on the prior corresponding period but a far more modest 1% reduction on the second half of FY 2023.
Despite the softer profits, the Westpac board decided to reward its shareholders with a dividend increase. The bank declared a fully franked interim dividend of 75 cents per share, which is a 7.1% increase on the prior corresponding period.
But the Westpac board didn't stop there. Thanks to its strong balance sheet, it added a surprise 15 cents per share special dividend into the mix, as well as an additional $1 billion on-market share buyback.
Unfortunately for income investors, Westpac's shares have now traded ex-dividend for both its interim dividend and special dividend. This means it is too late to receive these payouts unless you were a shareholder before the ex-dividend date.
But don't worry, there are more dividends on the way. But how big will they be? Let's take a look at what analysts are forecasting for the Westpac dividend following this result.
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Westpac dividend forecast
According to a note out of Goldman Sachs, its analysts have lifted their Westpac dividend estimates in response to its half year results.
The note reveals that Goldman now expects a fully franked $1.65 per share dividend in FY 2024. Based on the current Westpac share price of $26.66, this equates to a 6.2% dividend yield.
Looking ahead, the broker now expects a $1.50 per share fully franked dividend in FY 2025. This is up from its previous estimate of $1.44 per share and represents a 5.6% dividend yield.
It is the same story in FY 2026, with Goldman now expecting another $1.50 per share dividend instead of $1.44 per share previously. This will mean another attractive 5.6% dividend yield for income investors that year.
This trend is expected to continue in FY 2027, with its analysts pencilling in another $1.50 per share fully franked dividend. This of course represents a third consecutive 5.6% dividend yield for investors to look forward to.
Overall, the outlook for the Westpac dividend has improved since the release of the bank's results and above-average yields are on the cards for the foreseeable future.
