Insights

The ANZ (ASX:ANZ) share price is now trading on a forecast 5.11% fully-franked dividend yield

Investors will be watching the company’s upcoming dividend closely.
The post The ANZ (ASX:ANZ) share price is now trading on a forecast 5.11% fully-franked dividend yield appeared first on The Motley Fool Australia. –

The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price has been trending upwards over the past 12 months. This comes as Australia’s third-largest bank has enjoyed positive investor sentiment, despite the economic impact caused by COVID-19.

At the end of Thursday’s market close, ANZ shares finished 1.07% higher to $27.38.

What’s going on with ANZ?

There are a couple of reasons why the ANZ share price has moved forward in 2021.

First and foremost, the bank released its third-quarter business update to the market on 18 August.

ANZ highlighted its CET1 ratio came in at 12.2%, a slight reduction from the 12.4% recorded in the previous period. In addition, the $1.5 billion buyback, which commenced on 4 August, is expected to reduce its CET1 ratio by 35 basis points.

The company also revealed a total provision release of $32 million for the quarter. This comprises an individual provision charge of $21 million and a collective provision release of $53 million.

The provision balance stood at $4.25 billion, with a collective provision coverage ratio of 1.24%.

In terms of the COVID-19 impact, ANZ noted that it has handed out roughly 1,300 customer loan deferrals during the current lockdown. This reflects about $600 million in value or 0.2% on its total home loan portfolio.

The other possible catalyst for the ANZ share price rise is Australia’s speedy vaccination program.

State governments have confirmed that once the majority of their populations are fully vaccinated, they will ease restrictions. This will see businesses get back to work and restart Australia’s economy. In turn, people will be able to service their loans, and the default rates will drop.

How much is ANZ forecast to pay in dividends?

With the bank scheduled to report its full-year results on 28 October, investors may be wondering about the dividend payments.

ANZ paid a fully franked dividend of 70 cents per share in July for the first half of FY21. This is above the 35 cents recorded in the prior period (FY20).

Goldman Sachs is forecasting a total FY21 dividend payment of 140 cents, implying a 70 cent-per-share final dividend payment. This would give ANZ a fully-franked current dividend yield of 5.11% and a forecasted payout ratio of roughly 65%. Not a bad return when including the strong ANZ share price rise.

It’s worth remembering that the company has consistently maintained or increased its dividend payments over the last 40 years. However, this does not account for the last 18 months due to COVID-19.

ANZ share price snapshot

In 2021, the ANZ share price has continued to rise in value, gaining more than 20% for investors. When factoring in the last 12 months, its shares are further in the green, up 60%.

On valuation grounds, ANZ presides a market capitalisation of approximately $77.12 billion, with 2.84 billion shares on its books.

The post The ANZ (ASX:ANZ) share price is now trading on a forecast 5.11% fully-franked dividend yield appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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