This morning BBY, Australia’s biggest non-bank owned stockbroker, has upgraded all of our big banks to a BUY rating.

The stockbroker has given each bank target prices significantly below what they previously set. Westpac (ASX: WBC), which has fallen significantly over the past two months has been given a target price of $28.50, which is only nine cents above its current price.

ANZ’s (ASX: ANZ) target price was cut 14% to $28.50, a figure that represents a 1% rise on current prices. NAB’s (ASX: NAB) target price was cut 12% to $30, which is very likely given the company’s higher than usual dividend.

Commonwealth Bank (ASX: CBA) is tipped to reach $70 per share but currently trades at $67.63. However, it already has a P/E of 14 which (since it doesn’t have much growth prospects) indicates that investors are buying the share for security and income which, as we know, becomes less appealing the higher the share price gets.

No one can predict short-term share prices with certainty, but finding good business models and strong management will set you up for long-term gain. Banking stocks are great safety and income plays but the biggest risk to investors is inflated share prices. It’s important to buy at the lowest price possible, where the dividends are highest and the company has less risk of being overvalued.

In the market for high yielding ASX shares? Get “3 Stocks for the Great Dividend Boom” in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading


Motley Fool contributor Owen Raskiewicz owns shares of ANZ.

HOT OFF THE PRESSES: Motley Fool’s #1 Dividend Pick for 2017!

With its shares up 155% in just the last five years, this ‘under the radar’ consumer favourite is both a hot growth stock AND our expert’s #1 dividend pick for 2017. Now we’re pulling back the curtain for you... And all you have to do to discover the name, code and a full analysis is enter your email below!

Simply enter your email now to receive your copy of our brand-new FREE report, “The Motley Fool’s Top Dividend Stock for 2017.”

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our https://www.fool.com.au/financial-services-guide">Financial Services Guide (FSG) for more information.