Commonwealth Bank of Australia (ASX: CBA) will soon be paying out its final dividend for the 2022 financial year.
CBA reported its FY22 result earlier this week for the 12 months to June 2022. It included profit growth, which enabled dividend growth from the big four ASX bank share.
Reporting season is a great way for investors to get an insight into how a business has been performing. For the income-focused investors, we also get to find out how many dollars are headed our way.
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CBA dividend yield for FY22
The big four ASX bank declared a final dividend of $2.10 per share, which was an increase of around 5% compared to the prior corresponding period.
Based on just this half-year dividend payment, shareholders will be getting a grossed-up dividend yield of around 3%.
But, CBA's annual yield is made up of more than just one dividend. The full-year dividend was $3.85 per share, which was an increase of 10% over FY21.
Using the full-year payout, the FY22 dividend yield for CBA shares is 5.4%.
The dividend payout ratio was 68% of the bank's cash earnings, or 75% after normalising for long run loan loss rates. It's targeting a full year payout ratio of 70% to 80% of cash net profit after tax (NPAT) and an interim payout of around 70% of cash NPAT.
Profit growth
CBA said that the bank's capital position and disciplined execution continue to support strong and sustainable returns to shareholders.
The big four ASX bank reported that its cash NPAT went up 11% to $9.6 billion and statutory NPAT grew by 9% to $9.67 billion. Profit generation can have a key influence on the CBA share price.
CBA said its profit was supported by operational performance and volume growth in core businesses as well as "sound" credit quality and the reduction of provisions related to the uncertainties associated with the impacts of the COVID-19 pandemic.
Interestingly, the bank's business lending and business deposits grew faster than the consumer side.
The pre-provision profit, which excludes one-off items, grew by 3.1% to $13.2 billion.
One thing that detracted from profit growth was the net interest margin (NIM) which fell 18 basis points to 1.9%. This decline occurred due to a "large increase in low yielding liquid assets and lower home loan margins." The bank said its medium-term outlook remains unchanged, with margins expected to increase in a rising rate environment.
Expected FY23 dividend yield
FY22 has already finished. We're more than a month into FY23. So, a worthwhile question is what the yield will be for the new financial year.
According to CMC Markets, CBA is projected to pay a dividend of $4.25 per share in FY23. That payout would translate into a grossed-up dividend yield of 6%.
CBA share price snapshot
Over the last month, CBA shares have risen by 7.7%.
