The Australian Financial Review is reporting that analysts at leading investment bank Macquarie Group Ltd (ASX: MQG) have singled out one of the big four Australian banks as the best bet among its peers for outperformance over the next three years.

Partly thanks to their big fully franked dividends many Australians will hold at least one of the big four banks of National Australia Bank Ltd. (ASX: NAB), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ) or Commonwealth Bank of Australia (ASX: CBA) in their share portfolios.

The Macquarie Bank research analysts reportedly think that ANZ Bank is the outstanding big-bank pick on current prices and even offers around “28 per cent upside” over time from current share price valuations.

The analysts also note that the market is currently attributing “negative” value to ANZ’s Asian businesses, which have struggled recently on the back of China’s slowdown and the subsequent commodity price bust.

ANZ Bank’s new chief executive, Shayne Elliot, is reportedly keen to divest some of the bank’s underperforming divisions including some of its Asian operations. This would help raise equity that could be used to pre-emptively boost the bank’s capital adequacy ratio and sidestep the need for dividend cuts if the prudential regulator moves to toughen regulatory guidelines in the years ahead.

For investors, ANZ Bank also continues to offer a tempting dividend yield in the region of 6.9% based on strong expectations for a fully franked full year dividend totaling close to $1.60. Given the outlook for flat dividends over the years ahead it looks a reasonable bet for income in my opinion, although the banks should form no more than a small part of a diversified investment portfolio.

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Motley Fool contributor Tom Richardson owns shares of Macquarie Group Limited.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.