Commonwealth Bank is a benchmark company for many mum-and-dad style investors, and it’s easy to see why! This article will report in detail, the Commonwealth Bank Dividend.
Commonwealth Bank CBA, has delivered excellent returns for investors over the past decade, averaging 9.18% yearly returns (excluding dividends). After accounting for reinvested dividends returns have been 18.50% per year.
CBA has far outperformed the average market return of 11.9% in the past decade.
They also recently announced their FY21 dividend and buy-back scheme.
CBA Dividend Snapshot
- Previous Full Year Net Dividend Payment: $2.98
- Previous Full Year Gross Dividend Payment: $4.257
- Previous Average Net Dividend Payment (2019): $4.31 (Yield at current price: 4.31%)
- Previous Average Gross Dividend Payment (2019): $6.157 (Yield at current price: 6.157%)
- Franking: 100%
Commonwealth Bank Dividend Dates 2021
|Full year results and final dividend announcement date||11 Aug 2021|
|Ex-dividend date for final dividend||17 Aug 2021|
|Record date for final dividend||18 Aug 2021|
|DRP participation deadline||19 Aug 2021|
|Final dividend payment date||29 Sep 2021*|
CBA 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.
CommBank typically announces a dividend with the release of its half-year results in February and full-year results in August as seen in their financial calendar. Dividends are typically paid twice a year, in March (interim dividend) and September (final dividend). Should I buy CBA Shares?
CBA has paid biannual dividends every year since 1992. This included during the GFC in 2008 and the COVID-19 recessionary period. All dividends paid by CBA during this time have been fully-franked. They also offer a Dividend Reinvestment Plan (DRP).
CBA Dividend Yields Comparison
CBA’s current gross divided yield is 4.25%. This is slightly lower than the other major banks (WBC, NAB, and ANZ). It is also slightly below the market average of 4.7%.
Net CBA Dividend Yields Over Time
We can see CBA’s net dividend yield has averaged a rate of 5-6%. From this we can CBA’s current net yield of 2.98% is below it’s historic average. We can see the yield spike in 2020 due to a signficant share price reduction. This yield tapered off as the share price increased, but earnings were still impacted.
CBA Dividend Payout Ratio and Policy
A companies dividend payout ratio is the ratio of the total dividen 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 CBA payout ratio is 65%, which we expect to increase in the coming years to a ratio of 74%.
Based on FY20 results CBA paid out $2.98 per share to investors. This comprised an interim payment of $2 and a final dividend of $0.98. Both were fully franked, hence giving a gross payment of $4.257 to shareholders.
We note in this report CBA annouced a payout ratio of 49.95%, inline with AHPRAs guidelines. These guidelines are based upon maintain liquidity in the current recessionary period.
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)
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.’
CBA FY21 Final Dividend (August 2021)
On the 11th of August CBA released their FY21 Full-year results and announced the final dividend, as well as an off-market share buyback.
- Cash NPAT up 19.8%
- Strong balance sheet and surplus capital
- Final dividend $2.00 – full year dividend $3.50
- $6bn off-market share buy-back
The final dividend of $2.00 per share is fully-franked and brings the full year 2021 payment to a net of $3.50. Over the period CBA returned $6.2 Billion to shareholders via dividends.
The Ex-Dividend date is 17th of August 2021 with a payment date of 29th September.
The final dividend payout ratio was 71% of the Bank’s cash earnings, or ~75% after normalizing for long-run loan loss rates.
The Bank will continue to target a full-year payout ratio of 70-80% of cash NPAT and an interim payout ratio of ~70% of cash NPAT. In considering the sustainability of dividends, the Board will continue to take into account a number of factors, including long-term average loss rates.
CBA Off-Market Share 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 an off-market buyback, the company will offer investors the opportunity to sell their shares back to the company at a fixed price. This action reduces the total number of shares outstanding, in return investors will own a larger percentage of the company and the share price will increase to reflect this.
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.
In calibrating the size of the buy-back, the Board considered:
• The capital generated from strategic divestments.
• The level of future organic capital generation and expected divestment proceeds.
• The size of franking credit surplus and future ability to fully frank dividends and hybrid distributions.
The Buy-Back will be conducted through a tender process, which provides Eligible Shareholders with an opportunity to sell some or all of their Shares to CBA:
- At a discount of between 10% and 14% (inclusive, and at 1% intervals) to the Market Price
- As a Final Price Application, which is an election to sell your Shares at the Buy-Back Price
What is the Capital Component of the Buy-Back Price? $21.66
What is the Dividend Component of the Buy-Back Price? The Dividend Component will be equal to the Buy-Back Price less the Capital Component of $21.66. The Dividend Component is expected to be fully franked.
|Buy-Back Ex-entitlement Date||17 August 2021|
|Buy-Back Record Date||18 August 2021|
|Buy-Back Period opens||30 August 2021|
|Buy-Back Period closes||1 October 2021|
|Buy-Back Date||4 October 2021|
CBA Share Price
CBA Dividend Policy
With the commencement of the 2021 calendar year, AHPRAs 50% payout guideline is no longer current, as such we will expect CBA to return to their dividend policy.
Commonwealth Banks Dividend Policy is:
Commonwealth Bank of Australia will seek to:
- pay cash dividends at strong and sustainable levels;
- target a full-year payout ratio of 70% – 80%; and
- maximise the use of its franking account by paying fully franked dividends
When are Dividends Paid?
When will my Commonwealth Bank Dividend be Paid?
The Bank typically announces a dividend with the release of its half year results in February and full year results in August. Dividends are typically paid twice a year, in March (interim dividend) and September (final dividend). Payment dates are listed on the financial calendar.
CBA 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.
The simplest way to elect to participate in a company’s DRIP is through the related share registry (i.e. Computershare or Link Market Services). 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
Commonwealth Dividend History
|Distribution Type||Dividend||Franking||Ex-Dividend Date||Payment Date||Dividend Yield|
|Final||$2.00||100%||17 Aug 2021||29 Sep 2021||1.85%|
|Interim||$1.50||100%||16 Feb 2021||30 Mar 2021||1.72%|
|Final||98c||100%||19 Aug 2020||30 Sep 2020||1.35%|
|Interim||$2.00||100%||19 Feb 2020||31 Mar 2020||2.25%|
|Final||$2.31||100%||14 Aug 2019||26 Sep 2019||2.93%|
|Interim||$2.00||100%||13 Feb 2019||28 Mar 2019||2.70%|
|Final||$2.31||100%||15 Aug 2018||28 Sep 2018|
|Interim||$2.00||100%||14 Feb 2018||28 Mar 2018|
|Final||$2.30||100%||16 Aug 2017||29 Sep 2017|
|Interim||$1.99||100%||22 Feb 2017||4 Apr 2017|
|Final||$2.22||100%||17 Aug 2016||29 Sep 2016|
|Interim||$1.98||100%||16 Feb 2016||31 Mar 2016|
|Final||$2.22||100%||18 Aug 2015||1 Oct 2015|
|Interim||$1.98||100%||17 Feb 2015||2 Apr 2015|
|Final||$2.18||100%||19 Aug 2014||2 Oct 2014|
|Interim||$1.83||100%||17 Feb 2014||3 Apr 2014|
|Final||$2.00||100%||19 Aug 2013||3 Oct 2013|
|Interim||$1.64||100%||18 Feb 2013||5 Apr 2013|
|Final||$1.97||100%||20 Aug 2012||5 Oct 2012|
|Interim||$1.37||100%||20 Feb 2012||5 Apr 2012|
|Final||$1.88||100%||15 Aug 2011||6 Oct 2011|
|Interim||$1.32||100%||14 Feb 2011||1 Apr 2011|
|Final||$1.70||100%||16 Aug 2010||1 Oct 2010|
|Interim||$1.20||100%||15 Feb 2010||1 Apr 2010|
|Final||$1.15||100%||17 Aug 2009||1 Oct 2009|
|Interim||$1.13||100%||16 Feb 2009||23 Mar 2009|
|Final||$1.53||100%||18 Aug 2008||1 Oct 2008|
|Interim||$1.13||100%||18 Feb 2008||2 Apr 2008|
|Final||$1.49||100%||20 Aug 2007||5 Oct 2007|
|Interim||$1.07||100%||19 Feb 2007||5 Apr 2007|
|Final||$1.30||0%||14 Aug 2006||5 Oct 2006|
|Interim||94c||100%||20 Feb 2006||5 Apr 2006|
|Final||$1.12||100%||15 Aug 2005||23 Sep 2005|
|Interim||85c||100%||14 Feb 2005||31 Mar 2005|
|Final||$1.04||100%||16 Aug 2004||24 Sep 2004|
|Interim||79c||100%||16 Feb 2004||30 Mar 2004|
|Final||85c||0%||25 Aug 2003||8 Oct 2003|
|Interim||69c||100%||17 Feb 2003||28 Mar 2003|
|Final||82c||100%||26 Aug 2002||8 Oct 2002|
|Interim||68c||100%||18 Feb 2002||28 Mar 2002|
|Final||75c||100%||27 Aug 2001||8 Oct 2001|
|Interim||61c||100%||19 Feb 2001||30 Mar 2001|
|Final||72c||100%||4 Sep 2000||9 Oct 2000|
|Interim||58c||100%||17 Feb 2000||31 Mar 2000|
|Final||66c||100%||18 Aug 1999||30 Sep 1999|
|Interim||49c||100%||16 Feb 1999||26 Mar 1999|
|Final||58c||100%||19 Aug 1998||30 Sep 1998|
|Interim||46c||100%||18 Feb 1998||27 Mar 1998|
|Final||57c||100%||14 Aug 1997||30 Sep 1997|
|Interim||45c||100%||19 Feb 1997||27 Mar 1997|
|Final||52c||100%||29 Aug 1996||30 Sep 1996|
|Interim||38c||100%||28 Feb 1996||1 Apr 1996|
|Final||46c||100%||27 Sep 1995||25 Oct 1995|
|Interim||36c||100%||3 Apr 1995||28 Apr 1995|
|Final||36c||100%||28 Sep 1994||26 Oct 1994|
|Interim||24c||100%||31 Mar 1994||29 Apr 1994|
|Final||22c||100%||29 Sep 1993||27 Oct 1993|
|Interim||20c||100%||2 Apr 1993||30 Apr 1993|
|Final||20c||100%||1 Oct 1992||30 Oct 1992|
|Interim||20c||100%||3 Apr 1992||30 Apr 1992|
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