Commonwealth Bank of Australia’s (ASX:CBA) dividend will be increasing from last year’s payment of the same period to A$2.60 on 29th of September. This takes the annual payment to 2.9% of the current stock price, which unfortunately is below what the industry is paying.
The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock.
Commonwealth Bank of Australia has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Past distributions do not necessarily guarantee future ones, but Commonwealth Bank of Australia’s payout ratio of 80% is a good sign as this means that earnings decently cover dividends.
EPS is set to grow by 10.4% over the next 3 years. The future payout ratio over that same time horizon is estimated by analysts to be 79% which is a bit high but can definitely be sustainable.
ASX:CBA Historic Dividend August 15th 2025
View our latest analysis for Commonwealth Bank of Australia
While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The annual payment during the last 10 years was A$4.01 in 2015, and the most recent fiscal year payment was A$4.85. This means that it has been growing its distributions at 1.9% per annum over that time. It’s encouraging to see some dividend growth, but the dividend has been cut at least once, and the size of the cut would eliminate most of the growth anyway, which makes this less attractive as an income investment.
Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that Commonwealth Bank of Australia has grown earnings per share at 7.7% per year over the past five years. The payout ratio is very much on the higher end, which could mean that the growth rate will slow down in the future, and that could flow through to the dividend as well.
Overall, we always like to see the dividend being raised, but we don’t think Commonwealth Bank of Australia will make a great income stock. The track record isn’t great, and the payments are a bit high to be considered sustainable. Overall, we don’t think this company has the makings of a good income stock.
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