Why Is CBA Offering a Fully Franked AUD 2.35 Dividend with No DRP Discount?

Dividend Announcement Overview

Commonwealth Bank of Australia (CBA) has confirmed an ordinary dividend payment of AUD 2.35 per fully paid ordinary share for the six months ending 31 December 2025. This dividend is fully franked, reflecting the bank’s continued strong profitability and commitment to returning value to shareholders. The payment date is scheduled for 30 March 2026, with the important ex-dividend date set for 18 February 2026 and the record date on 19 February 2026.

Dividend Reinvestment Plan Details

Shareholders have the option to participate in CBA’s Dividend Reinvestment Plan (DRP), which allows them to reinvest their dividend payments into additional shares rather than receiving cash. Notably, the DRP will be offered with no discount on the share price, calculated as the average daily volume weighted average price over the 20 trading days from 23 February to 20 March 2026. The deadline for shareholders to elect participation in the DRP is 5pm on 20 February 2026.

Currency Flexibility for Shareholders

A key feature of this dividend announcement is the flexibility offered to shareholders regarding currency payments. While the dividend is declared in Australian dollars, shareholders with registered addresses in Australia, New Zealand, and the United Kingdom can receive payments in their local currency, provided they have nominated a valid bank account by the record date. Additionally, shareholders worldwide can elect to receive dividends in Australian dollars, New Zealand dollars, or British pounds through arrangements with OFX Group Limited. This multi-currency approach reflects CBA’s recognition of its diverse shareholder base and the importance of accommodating international investors.

Tax and Franking Considerations

The dividend is fully franked at the corporate tax rate of 30%, which means shareholders will receive a franking credit equal to the dividend amount, reducing their overall tax liability. For New Zealand shareholders, a New Zealand Imputation Credit of NZD 0.15 per share is also available. These tax attributes enhance the attractiveness of the dividend, particularly for investors seeking tax-effective income streams.

Implications for Investors

This dividend announcement underscores CBA’s stable earnings and shareholder-friendly capital management strategy. The availability of a no-discount DRP provides a straightforward option for investors to compound their holdings without incurring additional costs. Meanwhile, the currency payment options may encourage greater participation from international shareholders, potentially broadening the bank’s investor base. Market participants will be watching closely for the uptake of the DRP and the impact of currency exchange rates on dividend receipts.