Commonwealth Bank of Australia (ASX: CBA) is now trading ex-dividend.
After having announced a record-breaking $8.7 billion profit on August 13, the big four bank raised its final dividend to $2.18 per share. This brought the bank's full-year dividend to $4.01 compared to last year's $3.64, taking its fully franked yield to 5%.
Although that might look appealing given the Reserve Bank's cash rate of 2.5%, investors also need to consider the price they are paying for the shares. Unfortunately, Commonwealth Bank is no longer trading at a reasonable price in my opinion and should not be bought by long-term focused investors.
Investors who own shares in the company today will receive their dividend on 2 October 2014.
The bank's shares have fallen $1.64 or 2% as at the time of writing, after having dropped as low as $79.37 earlier in the session. In comparison, Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB) have risen 0.3% each, while Westpac Banking Corp (ASX: WBC) has jumped 1%.
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Each of the big four banks remain popular amongst investors thanks to their solid dividend yields. However, with their stock now trading at unreasonably high prices, investors ought to consider other income options.
