Over the past 10 years, Australia and New Zealand Banking Group (ASX: ANZ) has risen from $19 per share to $33 and paid out $12.85 (plus franking) in dividends. If you bought and held those shares, the current dividend payout would equate to a yield of 8.6%.
The return is quite impressive, particularly once we consider that we've had a GFC, U.S. debt crisis and European debt crisis in that time. I guess someone forgot to tell ANZ.
However, closer to home we've also experienced both a resources and housing boom and continued credit growth with sustained high interest rates. Making foreign investment in our economy much more appealing, spurring on economic growth. This was the norm, until recently.
So can we accurately assess the bank by looking at its track record? And if so, is it currently in a position which looks likely to be 'cheap' when we look back in years to come?
As Foolish (capital 'F') investors know, we can't assess a company by its track record. The world of investing changes every day and although there are many timeless methods and strategies, the industry requires us to carefully assess each company on its future potential, not its past, whenever we think about committing to a trade. After all, we don't drive a car looking in the rear vision mirror.
So taking a closer look at ANZ, it's obvious that the stock is not cheap by historical measures (such as long-term price-earnings ratio, net interest margins or book value), nor is it cheap when we forecast future growth with basic metrics like the PEG ratio, bad and doubtful debts and economic growth.
Therefore, although it has an outstanding track record, it appears ANZ and its peers – such as the Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd (ASX: NAB) – are not cheap. Even if we factor in historical growth trends.
Foolish takeaway
Although it may not be cheap on valuation metrics, long-term shareholders can sit back and enjoy slow but steadily rising dividend payments with franking credits. Potential investors may want to look at other top dividend ideas to add to their portfolio, such as…
