Australia and New Zealand Banking Group (ASX: ANZ) has been on a blistering run over the past five years, with its share price jumping 43%.
That compares to the S&P/ASX 200's (ASX: XJO) (Index: ^AXJO) return of just 20.7%.
Including its bi-annual fully franked dividends, an investment in ANZ shares during April 2010 has returned around 71.6%. That's a handy outperformance!
ANZ's peers – Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC) – have also performed exceptionally well.
However the outlook for the domestic economy over the next five years doesn't appear anywhere near as rosy as it has been historically.
For the big banks, that means growth is likely to be harder to come by with the fallout of the mining boom yet to ripple throughout the entire economy.
Whilst, right now mightn't a good time to buy bank stocks, ANZ is one stock which deserves a spot on every investors' watchlist. Here's why.
- Super Regional Strategy. Launched in 2007 by current CEO, Mike Smith, ANZ's Super Regional Strategy is targeting Asia for its next wave of growth. Whilst the region could experience heightened amounts of volatility in coming years, the long-term consensus amongst financial commentators is for continued growth from Asian markets.
- Dividend yield. In a low interest rate environment, this is a no-brainer. In the years ahead, ANZ will likely continue paying out its juicy fully franked dividend as earnings grow.
Should you ANZ shares today?
As noted above, the outlook for the domestic economy is bleak. ANZ somewhat mitigates this with its overseas exposure. However, we're currently at the wrong end of the economic cycle to justify a long-term investment in any domestic bank stock, including ANZ. There'll come a time to buy them, but at today's prices, I think investors will do well to avoid bank stocks altogether.
