Bendigo and Adelaide Bank Limited (ASX:BEN) offers a trailing grossed-up Yield of 8.72%, and shareholders can reinvest their dividends through the bank's Dividend reinvestment plan (DRP). The plan is operating for the fully franked FY26 final dividend of 33 cents per share, with a DRP price of $10.31.

Bendigo shares finished at $10.32, down 19.94% over the past year. Fully franked dividends of 63 cents with the relevant ex-dates in the past 12 months give a trailing yield of 6.10%. Both figures are historical, not forecasts.

Latest developments

Bendigo reported its FY26 results, with cash Earnings rising 3.0% to $530.2 million and statutory net profit after tax reaching $375.1 million. Net interest Margin rose to 1.98% in the second half, supported by growth in lower-cost deposits.

The results included a $70 million provision for a multi-year program to improve non-financial risk management. Bendigo is also progressing its productivity program, working with external service providers, and expects annual run-rate benefits of $65 million to $75 million before tax from FY28. The Acquisition of RACQ Bank's Loan and deposit books remains on track to complete in the first half of FY27.

Key numbers

Bendigo closed at $10.32, compared with $12.89 a year earlier. Its two dividends with the relevant ex-dates in the past 12 months, a 30 cent interim and the 33 cent final, total 63 cents per share and were fully franked. That gives a trailing yield of 6.10% and a grossed-up yield of 8.72%.

The grossed-up figure assumes a 30% company tax rate, and its value depends on each investor's tax position. The final dividend is fully franked, while the full-year dividend of 63 cents matched FY25.

About the company

Bendigo and Adelaide Bank is one of Australia's larger regional banks. It offers consumer, residential, Business and commercial lending, deposits, payments, Wealth and funds management, superannuation, and treasury and foreign exchange services. Richard Fennell is managing director and chief executive.

The bank has been investing in digital tools, including the rollout of its lending platform, as it seeks to improve efficiency and compete with larger banking groups. It also has Capital Notes listed on the ASX alongside its ordinary shares, but the DRP discussed here applies to the ordinary shares only.

How the DRP works

Bendigo's DRP applied to the FY26 final dividend. The bank set the DRP price at $10.31, based on the arithmetic average of daily volume-weighted average prices (VWAP) over the applicable pricing period. The DRP discount rate was 0%.

The DRP shares are newly issued. Bendigo's DRP terms allow the board to issue new shares, arrange on-market purchases or use a combination of the two, and to determine any applicable discount. Shareholders who do not elect to participate receive the dividend in cash.

Investors should check the latest DRP terms and dividend notice before electing, as the pricing methodology, discount and other conditions can change between distributions.

Why it matters for income investors

For investors who can use franking credits, full franking lifts Bendigo's 6.10% cash yield to a grossed-up 8.72%. The bank has maintained its dividend at 30 cents for the interim and 33 cents for the final across the past two financial years, providing a consistent recent payout level for shareholders to assess.

Reinvesting through the DRP adds shares without brokerage, and those shares can subsequently qualify for future dividends. The final dividend's $10.31 DRP price was close to the $10.32 share price used in the article, showing how closely the plan's market-based pricing can track the prevailing share price.

After a decline in the share price over the past year, reinvested dividends can purchase more shares for the same dollar amount than they would at a higher share price. However, reinvestment does not protect shareholders against further movements in the share price.

What comes next

Bendigo's key areas of focus include completing the RACQ Bank transaction, progressing its productivity program and delivering its non-financial risk management initiatives. Future half-year results will provide further information on earnings, margins, Credit quality and the bank's dividend position.

Investors will also watch the net interest margin, deposit competition and bad debts, which influence bank earnings and therefore the capacity to pay dividends. Interest-rate conditions will remain relevant for lending volumes, funding costs and margins. Any future dividend amount, franking level or DRP terms will be determined by the board and disclosed to shareholders.

Risks and context

A trailing yield is not a forecast. Bank dividends depend on earnings, capital levels and regulatory settings, and Bendigo's full-year payout was flat rather than increasing. The share price has fallen 19.94% over the past year, so capital losses can outweigh dividend income.

Company-specific risks include competition for mortgages and deposits from larger banks, margin pressure if interest-rate conditions change, credit losses if economic conditions weaken, execution risk associated with productivity and risk-management programs, and potential regulatory costs. New DRP shares add to the share count. Reinvested dividends remain subject to applicable tax treatment, including franking credits, and each DRP parcel establishes a new cost base for Capital Gains Tax purposes.

Conclusion

Bendigo and Adelaide Bank (ASX:BEN) offers an 8.72% trailing grossed-up yield that shareholders can reinvest through a DRP operating for the 33 cent final dividend at $10.31 per share. Steady fully franked dividends and higher cash earnings provide context for the income profile, while a flat payout, risk-management costs, competition and a lower share price remain important considerations.