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Commonwealth Bank of Australia (ASX: CBA) recently released its FY24 half-year results, which showed a 3% decline in cash net profit after tax (NPAT) to $5 billion and an 8% drop in statutory NPAT to $4.8 billion. Despite the decrease in profit, the bank announced a slightly higher dividend compared to the previous year.
The bank declared a fully franked half-year dividend of $2.15 per share, marking a 2% increase from the FY23 first-half dividend. This dividend payout represented 72% of cash NPAT, indicating that the bank retains 28% of its profit for reinvestment or to enhance its balance sheet. ASX financial stocks, including the bank in question, have been under scrutiny amid shifts in dividend policies and capital allocation strategies. The bank's decision to increase its dividend while retaining a portion of its profit for reinvestment underscores its commitment to balancing shareholder returns with strategic investments for future growth and stability.
Shareholders have the option to participate in the dividend reinvestment plan (DRP), although no discount will be applied to the shares allocated under the plan for the interim dividend. CBA intends to purchase all shares on the market to fulfill the shares needed for the DRP.
The ex-dividend date for the upcoming dividend is set for 21 February 2024, requiring investors to own shares by the end of trading on 20 February 2024 to be eligible for the dividend. The DRP participation date is scheduled for 23 February 2024, and the dividend is expected to be paid on 28 March 2024.
Additionally, the bank has been returning cash to shareholders through its share buyback program, having completed $154 million out of the planned $1 billion share buyback.
As for the dividend yield, based on the current CBA share price, the $2.15 per share payout translates to a fully franked dividend yield of 1.9% and a grossed-up dividend yield of 2.7%. Considering the dividends from the last two periods, the fully franked dividend yield amounts to 4%, with a grossed-up yield of 5.75%.
CBA shares have appreciated by 9% over the past six months, reflecting investor sentiment and market performance.
