The entire banking sector offers extremely lucrative dividend yields. It’s easy to see why bank stocks are a favorite amongst yield investors. At the time of writing ANZ has the highest dividend yield across the banks. This article will report in detail, the ANZ Dividend.
Over the past decade, ANZ shareholders have enjoyed on average 15.61% per year from their shares. With dividends accounting for 10.79%.
ANZ has far outperformed the average market return of 11.9% in the past decade.
ANZ Dividend Summary
|DPS (Trailing 12-Month)||$1.30|
|Gross DPS (Trailing 12-Month)||$1.8571|
ANZ Dividend Dates 2021
|Results Reporting||5 May 2021||28 Oct 2021|
|Declaration date||5 May 2021||28 Oct 2021|
|Ex-div date||10 May 2021||8 Oct 2021|
|Record Date||11 May 2021||9 Oct 2021|
|Pay date||1 July 2021||16 Dec 2021|
ANZ Dividend History Graph
The Banking sector has been one of the favorites for investors over the years due to its decent returns and solid dividend history. It’s no surprise why the sector makes up around 30% of the entire market index. Over the past decade, big banking stocks have managed to maintain a steady flow of income for investors, with an exception of the COVID dip.
ANZ typically announces a dividend with the release of its half-year results in May and full-year results in October as seen in their financial calendar. ANZ Dividends are typically paid twice a year, in July (interim dividend) and December (final dividend).
ANZ has paid biannual dividends every year since 1979. Including the COVID-19 recessionary period. Most dividends have been fully franked. They also offer a Dividend Reinvestment Plan (DRP). We did see them reduce franking to 70% for the interim dividend in 2019.
ANZ Dividend Yield Comparison
The current ANZ yield of 6.29% far exceeds the Average Term Deposit rate of 0.4%
Net ANZ Dividend Yields Over Time
We can see ANZ’s net dividend yield has averaged a rate of around 6%. From this, we can see ANZ’s current net yield of 4.4% is below its historic average.
We can see the yield spike in 2020 due to a significant share price reduction. This yield tapered off as the share price increased, but earnings were still impacted. We are expecting earnings to return in 2021.
ANZ Dividend Payout Ratio and Policy
A companies dividend payout ratio is the ratio of the total dividend sum paid out relative to the net income of the company. It is the percentage of earnings paid to shareholders in dividends.
Based on current averages ANZ’s payout ratio is 60%, which we expect to increase in the coming years to a ratio of 72%.
So far in 2021, we have seen ANZ payout its interim dividend of 70 cents.
- Interim Dividend of 70 cents fully franked, representing 52% DPOR on a 1H21 cash ex. LNI basis
- The effect of the DRP to be neutralised by acquiring these shares on market
In last year’s FY20 results ANZ paid out 60 cents per share to investors. This comprised an interim dividend of $0.25 and a final dividend payment of $0.35 which was fully franked.
We note in this report ANZ announced a payout ratio of 49%, in line with AHPRAs guidelines. These guidelines are based upon maintaining liquidity in the current recessionary period.
“Banks should seriously consider deferring decisions on the appropriate level of dividends until the outlook is clearer”
APRA has indicated that for the remainder of the calendar year boards should:
- seek to retain at least half of their earnings when making decisions on capital distributions (and utilise dividend reinvestment plans and other initiatives to offset the diminution in capital from capital distributions where possible)
With APRA and RBNZ easing bank dividend restrictions, payout ratios are again increasing
The amount that is not paid to shareholders is retained by the company to pay off debt or to reinvest in core operations. It is sometimes simply referred to as the ‘payout ratio.’
ANZ Share Price
ANZ Dividend Policy
ANZ has no recorded Dividend Policy. From past results, the group seems to target a payout ratio of 70-80%, which is common amongst the banks. They also appear to target fully-franked dividends.
ANZ has no recorded Dividend Policy
With the commencement of the 2021 calendar year, AHPRA’s 50% payout guideline is no longer current, as such, we will expect ANZ to return to a more normalized payout ratio.
When will my ANZ Dividends be Paid?
The Bank typically announces a dividend with the release of its half-year results in May and full-year results in October. Dividends are typically paid twice a year, in July (interim dividend) and December (final dividend). Payment dates are listed on the financial calendar.
ANZ Dividend Reinvestment Plan (DRIP)
A DRIP or dividend reinvestment plan allows investors to automatically reinvest their dividends for additional shares in the company. Using this method, the investor will still receive the franking credit and will still be taxed on the cash value of their dividend.
- In Computershare it’s as simple as going ‘my profile’- ‘Reinvestment plans’ and selecting the company and electing to participate in full or partially. That is either the entire amount or a partial amount of your dividend is reinvested.
- On Link you simply click view details of the company of interest and update it in the ‘payments and tax’ section.
For more information check out our ASX DRIP VS NON-DRIP Guide
The Return of Dividends
Following the loss of earnings, we saw companies cut dividends across the board, leading to a massive reduction in the average dividend yield across the market. Now averaging below 4%. We saw the 4 big banks, which are known as massive dividend stocks, cut their yield by around 50% in 2020.
We saw the big four banks, cut dividends by around 50% in 2020
Following the return of earnings, we are expecting to see dividends returning to very attractive yields. Though we can’t expect past payout ratios, as many companies will elect to hold a large amount of cash on hand to strengthen their balance sheet against future uncertainties.
In 2021 we are expecting to see the big banks return more than $30 Billion to shareholders.
Across the market, we are expecting to see payout ratios increase by more than 10%. Which will have a big impact on the average yield rate. We are expecting to see the big banks return more than $30 Billion to shareholders.
ANZ Share Buy-Back Capital Management Plan
In July 2021 ANZ announced it intends to buy-back up to $1.5 billion of shares on-market as part of its capital management plan.
“Despite the very real challenges being experienced by many of our customers, we have the financial strength to continue to support our
customers, while also returning surplus capital to shareholders.
After reviewing options, we consider an on-market buy-back to be the most prudent, fairest and flexible method to return capital in the current environment”ANZ Chairman Paul O’Sullivan
ANZ’s reported Level 2 and Level 1 Common Equity Tier 1 capital (CET1) ratios as at 31 March 2021 were 12.4% and 12.2% respectively, well in excess of APRA’s stated unquestionably strong capital requirement of 10.5%.
The on-market buy-back is expected to reduce ANZ’s March 2021 CETI ratio by approximately 35 basis points. A purchase of shares is likely to begin in August 2021.
What is a Buy-Back?
A share repurchase is where a company will buy back its shares from investors. This can be completed one of two ways; via an on-market buyback or off-market buyback.
In the on-market method, the company will directly go to the market and repurchase their shares from those selling, as any regular investor would.
The company will then either cancel the shares or hold them, so as they are not publicly traded. The EPS of the company will be artificially raised as the formula earnings/shares have been altered whereas the number of shares PE may temporarily decrease due to an increase in EPS. Learn more about Share Buy-Backs Here.
ANZ Dividend History
|Pay date||Record date||Dividend (AUD)||Franking||ASX announcement|
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