Better buy: CBA or Westpac stock?
Shareholder returns are largely made up of two elements – share price movements and dividend payments.
If I'm going to be a long-term investor, the dividends are going to provide me with 'real' returns each year, so that's going to be a focus.
While huge dividend yields can come with pitfalls, the banks have generally provided stable payments (aside from the COVID-19 period).
According to the (independent) projections on Commsec, owners of CBA stock are expected to get an annual dividend per share of $4.55 in FY24 and $4.61 in FY26. This means the grossed-up dividend yield could be 5.5% in FY24 and 5.6% in FY26.
The Commsec estimates also suggest that owners of Westpac stock could receive an annual dividend per share of $1.44 in FY24 and $1.46 in FY26. That would imply a grossed-up dividend yield of 7.8% in FY24 and 7.9% in FY26. $Westpac Banking Corp (WBC.AU)$ $CommBank (CBA.AU)$
On this measure, Westpac is predicted to offer a much better dividend yield.
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