How much must I invest in Westpac shares to earn $2,000 of dividend income?

Owning Westpac Banking Corp (ASX: WBC) shares is typically a good source of dividend income each year.

The bank regularly likes to give investors a sizeable portion of its profit each year, creating a solid dividend yield.

For example, in the 2026 financial year for the 12 months to 30 September 2026, the ASX bank share decided on a dividend payout ratio of 77% of statutory net profit and 75% of net profit excluding notable items. That keeps around a quarter of the net profit within the business to help future growth.

With a payout ratio in the 70% range, I think it can continue to sustainably fund dividend payouts at the current level.

In the FY26 result, released on 2 November 2026, Westpac reported earnings per share (EPS) of $1.99. That means it's currently trading on a price/earnings (P/E) ratio of 19x FY26's earnings.

FY26 dividend

Now that shareholders have seen the FY26 result, they've also learned what the FY26 annual dividend is.

With Westpac's cash net profit generation flat compared to FY25, at $7 billion, the dividend was largely held. The final dividend was maintained at 77 cents per share and the annual dividend per share was hiked by 1% to $1.54.

At the time of writing, the FY26 annual dividend translates into a dividend yield of 4.1% excluding franking credits and 5.9% including franking credits.

How many Westpac shares would it take for $2,000 of dividend income?

The ASX bank share is forecast to deliver investors a slight rise in the annual dividend per share in the 2027 financial year to $1.55, according to the projection on Commsec.

This translates into a forward dividend yield of 4.15% excluding franking credits and 5.9% including franking credits.

To earn $2,000 of dividend income from the ASX bank share, an investor would need 1,291 Westpac shares (costing around $48,400) to achieve that level of dividend cash based on the forecast FY27 payout. If we include the franking credits as part of the income goal, it would only take 904 Westpac shares (costing around $33,864).

Is this a good time to buy Westpac shares?

I don't think Westpac is particularly attractive right now considering it's trading on a P/E ratio of close to 19. According to Commsec data, it traded at an average annual P/E ratio of around 16, so it's trading more expensively than it has done so recently.

Plus, I'm cautious about its earnings growth outlook considering the higher interest rates and property taxation changes are likely to hurt credit demand for the foreseeable future.

According to CMC Invest, of nine analysts that rated the bank in the last three months, six gave sell ratings, two hold ratings and just one buy rating.

The average price target is $33.84 between those nine brokers, implying a possible decline of around 10%.

It looks to me like there are better ASX share opportunities to consider.

The post How much must I invest in Westpac shares to earn $2,000 of dividend income? appeared first on The Motley Fool Australia.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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