Why Australia and New Zealand Banking Group Limited (ASX:ANZ) Is A Dividend Rockstar

There is a lot to be liked about Australia and New Zealand Banking Group Limited (ASX:ANZ) as an income stock, over the past 10 years it has returned an average of 6.00% per year. The stock currently pays out a dividend yield of 5.75%, and has a market cap of AU$79.83b. Does Australia and New Zealand Banking Group tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. View out our latest analysis for Australia and New Zealand Banking Group

How I analyze a dividend stock

If you are a dividend investor, you should always assess these five key metrics:

• Is its annual yield among the top 25% of dividend-paying companies?

• Has it paid dividend every year without dramatically reducing payout in the past?

• Has dividend per share amount increased over the past?

• Is its earnings sufficient to payout dividend at the current rate?

• Will it have the ability to keep paying its dividends going forward?

ASX:ANZ Historical Dividend Yield June 24th 18

How well does Australia and New Zealand Banking Group fit our criteria?

Australia and New Zealand Banking Group has a trailing twelve-month payout ratio of 63.00%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a higher payout ratio of 71.85%, leading to a dividend yield of around 5.93%. However, EPS is forecasted to fall to A$2.35 in the upcoming year. Therefore, although payout is expected to increase, the fall in earnings may not equate to higher dividend income.

Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Although ANZ’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Investors have seen reductions in the dividend per share in the past, although, it has picked up again.

In terms of its peers, Australia and New Zealand Banking Group generates a yield of 5.75%, which is on the low-side for Banks stocks.

Next Steps:

Considering the dividend attributes we analyzed above, Australia and New Zealand Banking Group is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. Below, I’ve compiled three pertinent factors you should further examine:

1. Future Outlook: What are well-informed industry analysts predicting for ANZ’s future growth? Take a look at our free research report of analyst consensus for ANZ’s outlook.

2. Valuation: What is ANZ worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether ANZ is currently mispriced by the market.

3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.