At $84.55, Commonwealth Bank of Australia (ASX: CBA) shares remain well below their all-time high of $96.69 recorded just over two months ago. With interest rates set to remain low for the foreseeable future, some investors are no doubt seeing now as the perfect opportunity to stock up on the beaten-down bank to take advantage of its lucrative dividend yield.
The bad news is, Commonwealth Bank's fully franked dividend isn't as appealing as what it used to be. Although the bank has increased its dividends per share over the years, its rising share price has had a negative effect on its yield. Check it out on the chart below.
Source: Yahoo! Finance and Commonwealth Bank annual reports
At its current price, Commonwealth Bank is expected to yield just under 5% this financial year, which is well below the fully franked 6.75% yield offered in 2012. Although it might still seem generous, the shares remain heavily overpriced and could more than wipe out any gains made on future dividend distributions.
