As with the rest of the big four banks, the Westpac Banking Corp (ASX: WBC) dividend is among the most popular options for income investors on the Australian share market.
For decades, Australia's oldest bank has shared a good portion of its profits with shareholders.
This continued in FY 2022, with the company recently declaring a final dividend of 64 cents per share, bringing its full year dividend to $1.25 per share.
Based on the current Westpac share price of $23.92, this represents a fully franked 5.2% yield for investors.
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Where next for the Westpac dividend?
The good news is that one leading broker believes it is onwards and upwards from here for the Westpac dividend.
According to a recent note out of Goldman Sachs, it is expecting the bank to increase its dividend to a fully franked $1.48 per share in FY 2023. This will be a solid 18.4% increase year over year and equates to an attractive forward yield of 6.2%.
Goldman expects this positive trend to continue in FY 2024 and is forecasting another 7.4% increase to $1.59 per share. This represents another very attractive fully franked dividend yield of 6.65% for investors.
The broker's forecasts for the Westpac dividend end in FY 2025. For that year, once again, its analysts expect the banking giant to be in a position to increase its dividend.
In FY 2025, Goldman is expecting the bank to reward its shareholders with a fully franked $1.69 per share dividend, which will be an increase of 6.3% year over year. Based on where Westpac's shares trade today, investors would receive a generous 7.1% dividend yield.
Should you invest?
Based on the above, it would be hard to argue against Westpac shares being a great option for income investors with limited exposure to the banking sector.
Goldman Sachs certainly thinks this is the case. It currently has a conviction buy rating and $27.60 price target on its shares. This implies potential upside of 15% for investors over the next 12 months.
