Commonwealth Bank of Australia (ASX: CBA) shares have long been popular with passive income investors for the bank's reliable, twice yearly dividend payouts.
The S&P/ASX 200 Index (ASX: XJO) bank stock even paid two fully franked dividends in the pandemic addled year of 2020.
Looking at the last two payouts, CBA paid a final dividend of $2.60 a share on 29 September. And the big four bank just paid its interim dividend of $2.35 a share on 30 March.
Atop those fully franked dividends, CBA shares have also gained 11.5% in 12 months, outperforming the 8.3% one-year gains posted by the ASX 200.
But with the CommBank share price now having more than doubled over five years, closing at $172.82 on Thursday, is Australia's biggest bank still a good passive income play?
Should you buy CBA shares for passive income?
Sanlam Private Wealth's Remo Greco recently ran his slide rule over the ASX bank stock (courtesy of The Bull).
"The bank is a quality company and a staple in investor portfolios," he said. "It has established a strong track record of performance over many years."
As for the passive income potential, Greco said:
The company delivered a 5% increase in statutory net profit after tax in the first half of fiscal year 2026. However, the dividend yield was trading below 3% on March 26, so better income is available elsewhere.
Indeed, at Thursday's closing price CBA shares trade on a fully franked trailing dividend yield of 2.9%.
That's significantly less than passive income investors were banking from the stock a few years ago.
For example, three years ago, on 31 March 2023, you could have bought CBA stock for $98.32 a share. And with an eye on the $4.20 a share in fully franked dividends the bank paid out over the prior 12 months, it was then trading on a trailing dividend yield of 4.3%.
Connecting the dots, Greco issued a sell recommendation on the big four bank.
He concluded:
The conflict in Iran suggests a possibly slowing global economy likely to impact credit growth in Australia's higher interest rate environment. CBA is trading at a premium to peers, so it may be time to consider reducing exposure in this volatile environment.
What kind of a premium does CommBank stock command?
CBA shares trade on a price to earnings (P/E) ratio of around 28 times.
As for the other big four Aussie banks: Westpac Banking Corp (ASX: WBC) trades on a P/E ratio of around 20 times; ANZ Group Holdings Ltd (ASX: ANZ) trades on a P/E ratio of around 19 times; and National Australia Bank Ltd (ASX: NAB) trades on a P/E ratio of around 19 times.
The post Are CBA shares still a good buy for passive income? appeared first on The Motley Fool Australia.
Motley Fool contributor Bernd Struben 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.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2026