With its 8.2% dividend yield, is the Commonwealth Bank of Australia (ASX: CBA) share price a buy?
Commonwealth Bank of Australia or CBA is Australia’s largest bank, with commanding market share of the mortgages (24%), credit cards (27%) and personal lending markets. It has 16.1 million customers, 14.1 million are in Australia. It is entrenched in the Australian payments ecosystem and financial marketplace.
Is The CBA Share Price A Buy For Income?
Commonwealth Bank has arguably been one of the best ASX shares for dividends over the past 25 years thanks to the unbroken growth of the Australian economy and the (until recently) excellent performance of the Australian property market.
Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB) may have faltered by trying to expand offshore, whilst Commonwealth Bank stuck to the safe Australian (and New Zealand) shores.
The Royal Commission was a horrifying experience for the major ASX banks, AMP Limited (ASX: AMP) and others. It has cost the major banks over a billion dollars so far. Most recently Westpac Banking Corp (ASX: WBC) took another $510 million hit to its profit.
But, the Hayne Royal Commission was seen as a win for the big banks because a lot of the blame was pointed at financial advisers and mortgage brokers.
CBA continues to produce relatively impressive profit figures, the last one showed a small increase of continuing cash profit and a solid dividend that was maintained at the same level as the year before.
Is CBA A Buy For Income?
Commonwealth Bank currently offers a fully franked dividend yield of 5.7%, or 8.2% with franking credits. This looks attractive on the face of it, but I believe there is a large chance that the banks may soon face higher bad debt charges from the falling house prices and rising loan arrears.
I think the reliable and proven ASX shares in the FREE REPORT below would be better investments over the next five years than CBA shares.
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Editors note: this article had previously stated that the CFSGAM sale was currently delayed. This was incorrect and the article has since been amended.
