MENU

3 reasons to buy ANZ

Regardless of what some may say, Australia’s banking system is held in the highest regard throughout the world as being one of the most profitable and secure. However, from an investing perspective they’re not without their risks.

Growth

ANZ (ASX: ANZ) ticks all the boxes for investors and could easily fit into any portfolio. Contrary to Commonwealth Bank (ASX: CBA) and Westpac (ASX: WBC), which have spent the past five years battling over mortgages and buying up subsidiaries to do their bidding, ANZ has extended its overseas presence. Pushing into Asia with its ‘Super Regional Strategy’, the company hope to tackle the rising needs of the region’s businesses and individuals. In 2007, the company drew 12% of earnings from its Asia, Pacific, European and American division and is on track to increase that to between 25%-30% by fiscal year 2017.

Income

Although its peers may offer slightly better dividend yields, ANZ is still a great stock for portfolio’s and self-managed super funds (SMSFs). It pays a solid 5% fully franked yield that trumps interest accounts and term deposits. Morningstar predicts the dividends will increase 15% between now and the end of 2014. In addition, the earnings per share (EPS) will increase 13%.

Efficiency

As banks grow, their ability to generate new revenue and profit tightens. They must release new products, cut costs or expand the business model through acquisitions or overseas ventures. ANZ has consistency remained Australia’s most efficient lender. In its most recent half-year report it improved on its ROE by a huge 15.5% as a result of a drive in earnings growth and a focus on capital efficiency.

Foolish takeaway

When buying blue chips, it is essential to purchase them at the right price. Unless you intend to hold them for a very long time, their modest growth trends will not be as appealing too short to medium term investors. However, out of the big banks ANZ has the most promising upside, comparable dividends and perhaps even more protection from a domestic slowdown in investment.

Interested in our #1 dividend-paying stock? Discover The Motley Fool’s favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of “The Motley Fool’s Top Dividend Stock for 2013-2014.”

More reading


Motley Fool contributor Owen Raszkiewicz owns shares in ANZ.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…

Including:

The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!