ANZ traded ex-dividend 83c part franked earlier this month, with its next offering for yield-hungry investors not due until November. With the RBA set to cut interest rates down towards 3%, ANZ’s yield of more than 6% will be very attractive to investors moving forward. However, its valuation is where deep-seated support occurs, with it trading on 12.5x compared to CBA on 28.5x. The valuation elastic band is stretching too far against the higher-yielding ANZ, admittedly not helped by risks around the integration of Suncorp’s bank, a new CEO, a major tech upgrade and a slight miss on revenue in this month’s 1H result. When the “certainty trade” eventually unwinds, we can see some of the CBA monies spread across the sector, with our target of new highs for ANZ over 15% higher – a very bullish inference for the ASX200.
- We are targeting the $33-34 area for ANZ into Christmas: MM holds ANZ in its Active Growth and Active Income Portfolios.
MM is long and bullish towards the ANZ Group
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