How does the CBA dividend yield compare to other ASX bank shares?

Will shareholders of Australia's biggest bank be rewarded with high dividends this year?

Woman with $50 notes in her hand thinking, symbolising dividends.

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

The Commonwealth Bank of Australia (ASX: CBA) share price rose so high last year that some analysts now consider it the most expensive bank stock in the world.

While share price rises are beneficial for investors, they can lower dividend yields unless earnings grow.

And many analysts say the earnings outlook for all Australian banks is pretty flat this year.

Darren Thompson, Head of Asset Management at Equity Trustees Asset Management, says:

Bank earnings are anticipated to be broadly flat due to a combination of modest credit growth, ongoing competition restricting net interest margins, ongoing cost pressures and already cyclically low bad debt provisions.

Let's find out how much the bank stocks are expected to pay in dividends this year.

How much will CBA shares pay in dividends this year?

The consensus expectation among analysts on the CommSec trading platform is that CBA shares will pay a dividend of $4.95 per share in 2025.

This is 6.45% higher than the $4.65 per share dividend that CBA paid to its shareholders last year.

This is the largest forecast dividend amount increase among the ASX 200 bank shares.

Other banks expected to pay increased dividends are ANZ Group Holdings Ltd (ASX: ANZ) (up 2.4%), National Australia Bank Ltd (ASX: NAB) (up 1.78%), and Macquarie Group Ltd (ASX: MQG) (up 1.56%).

The smaller regional banks are also expected to pay higher dividends in the new year.

The forecast dividend is 3.17% higher for Bendigo and Adelaide Bank Ltd (ASX: BEN). It is 2.94% higher for Bank of Queensland Ltd (ASX: BOQ).

However, given significant share price rises in 2024, these higher dividend amounts do not automatically translate to higher dividend yields.

What do much higher share prices mean for dividend yields?

ASX bank stocks had a phenomenal run of share price growth last year.

CBA shares shot the lights out with a 37.1% gain over the 12 months.

A higher share price will typically lead to a lower dividend yield unless a company increases its earnings enough to enable a significant boost to dividends.

However, Andrew Dale, portfolio manager and partner at ECP Asset Management, says the banks may face earnings pressure this year amid a sluggish Australian economy and high interest rates.

In an article on S&P Global Market Intelligence, Dale said:

If inflation continues to be an issue over the first half, the banks will continue to have earnings pressure because their costs of operating will continue to rise.

And you'll see further downward pressure on earnings.

And if you then start to see a rate cut, you get pressure on the net interest margin.

Jed Richards of Shaw and Partners also discussed CBA shares recently, telling The Bull:

Given high interest rates, increasing costs, a flat Australian economy and intensifying private debt competition, we believe the banking sector faces challenges in sustaining recent profits let alone generating growth.

The CBA's price/earnings ratio [P/E] is much higher than historical levels and is pricing in considerable growth.

In our view, this is highly unusual and unlikely given the economic environment.

CBA reported flat operating income of $27 billion and a 3% increase in operating costs to $12.2 billion in FY24. The net interest margin (NIM) fell eight basis points to 1.99%.

Overall, net profit after tax fell 2% to $9.8 billion, but this was better than analysts' expectations.

Forecast dividend yields for 2025

Here are the forecast dividend amounts and yields for the ASX banks based on their current share prices.

These forecasts have been published on the CommSec trading platform.

I've also included the dividend amounts for 2024 and the trailing yields based on current share prices.

ASX bank share2024 dividend Trailing yield Forecast 2025 dividend Yield
Commonwealth Bank of Australia

(ASX: CBA)
$4.652.91% $4.953.1%
National Australia Bank Ltd (ASX: NAB)$1.694.24% $1.724.32%
Westpac Banking Corp (ASX: WBC)$1.664.97% $1.554.64%
Macquarie Group Ltd (ASX: MQG) $6.402.72%$6.502.76%
ANZ Group Holdings Ltd (ASX: ANZ)$1.665.44% $1.705.57%
Bendigo and Adelaide Bank Ltd 

(ASX: BEN)
63 cents4.67%65 cents4.81%
Bank of Queensland Ltd (ASX: BOQ)34 cents4.93%35 cents5.07%
Source: CommSec. Yields calculated by the author based on share prices at the time of writing

As you can see, the forecast CBA dividend yield is below the long-term average for the ASX 200 index, which is 4%.

ANZ shares are expected to pay the highest dividend yield in 2025.

If CBA shares go through a price correction, the yield will obviously improve.

Firetrail Investments expects the valuation multiple on CBA shares to fall sharply "at some point".

In its December shareholder letter, the fund manager said:

Our preferred metric is price-to-book versus return on equity (ROE). The higher the ROE, the more the market is willing to pay for an asset.

If CBA trades back to something more 'normal', given its fairly muted ROE outlook, you should expect a 30%+ retracement in the valuation at some point!

Should you invest $1,000 in Australia And New Zealand Banking Group right now?

Before you buy Australia And New Zealand Banking Group shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Australia And New Zealand Banking Group wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 9 January 2025

Motley Fool contributor Bronwyn Allen has positions in Macquarie Group. 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

A happy construction worker or miner holds a fistfull of Australian money, indicating a dividends windfall
Resources Shares

How does the Fortescue dividend yield compare to other ASX mining shares?

Fortescue typically pays excellent dividend yields, but can it do so again in 2025?

Read more »

a man wearing casual clothes fans a selection of Australian banknotes over his chin with an excited, widemouthed expression on his face.
Dividend Investing

Why Goldman Sachs is bullish on these top ASX dividend stocks

One of these income stocks is forecast to pay a 10% dividend yield.

Read more »

Happy couple doing grocery shopping together.
Dividend Investing

How much passive income would a $10,000 investment in Woolworths shares make in 2025?

Let's see what could happen to an investment in this supermarket giant's shares this year.

Read more »

Happy young couple saving money in piggy bank.
Dividend Investing

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

Analysts think income investors should be snapping up these shares before it is too late.

Read more »

Smiling woman holding Australian dollar notes in each hand, symbolising dividends.
Dividend Investing

2 ASX 300 shares that I think are buys for both growth and dividends

These stocks could provide an appealing mix of returns.

Read more »

Man holding out Australian dollar notes, symbolising dividends.
Dividend Investing

2 ASX shares with dividend yields above 7%

These ASX shares could pay huge yields in the coming years.

Read more »

A brickie sits next to a pile of bricks all stacked up and ready to lay.
Dividend Investing

1 superb ASX dividend stock down 20% to buy in bulk

Down but not out, there are plenty of reasons why I think this company is worth a look.

Read more »

A smiling woman with backpack and a map sits on a rocky cliff about to embark on a new investing journey.
Dividend Investing

Here's how I'm trying to build up my ASX share portfolio to earn $20,000 passive income each year

I'm not just investing in the highest-yielding shares...

Read more »