Is the Australia and New Zealand Banking Group (ASX: ANZ) share price worth buying for the 8.5% dividend yield?
ANZ is a leading Australian and New Zealand banking institution, with a presence throughout the oceanic region. ANZ is one of the Big Four Aussie banks and derives much of its revenue from mortgages, personal loans and credit.
Is The ANZ Share Price Worth Buying For Dividends?
So far in 2019 the ASX 200 has gone up 19% whilst the ANZ share price has only gone up by 12.6%.
There may be an argument to say that ANZ shares are now better value compared to the index than they were at the start of the year.
ANZ shares are justifiably higher this year after the Royal Commission came back okay for the big banks, APRA reduced the interest rate buffer, the RBA cut interest rates and Australian house prices stopped falling.
But it’s other shares in the ASX 200 that investors have been drawn to this year. It’s perhaps understandable with how ANZ’s mortgage arrears continue to climb.
At June 2019 total residential mortgages that were 90+ days past due had grown to 0.79% from 0.70% at March 2019 and 0.61% at September 2018.
Its ANZ’s current (huge) loan book that theoretically cause the bank to experience a large amount of losses, as good as attracting more borrowers into the market is.
Are ANZ’s Dividends Safe?
But perhaps with all of the positive factors that the banking sector has experienced since the start of the year will lead to firmer earnings for ANZ, Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and Commonwealth Bank of Australia (ASX: CBA).
If that’s the case then ANZ’s dividends may be safer than they were at the start of the year. It has been paying 80 cents per share every six months for a few years now and this seems likely to continue as long as there are no big economic shocks like the trade war between the US and China.
But I don’t have a crystal ball and there is still a risk for ANZ whilst mortgage arrears keep going up. The fully franked dividend yield of 6% could be a good option for big dividends, but the reliable shares in the free report below could be even better over the long term.
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At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.