Should you bank on Commonwealth Bank of Australia in 2015?

Despite the market’s wobbles, Commonwealth Bank of Australia (ASX: CBA) shares have managed to maintain their composure in recent weeks to be trading within just 3.5% of their all-time high at $80.96. With the Reserve Bank now tipped to ease interest rates in 2015, investors will be hoping that the bank can surge to even greater heights in 2015.

While that scenario could play out, there are perhaps even more reasons to suggest the bank’s shares may have already run their race. Now up 68% since the beginning of 2012 (not including dividends), Commonwealth Bank shareholders could actually see their shares underperform the broader market in 2015.

To begin with, each of Australia’s big four banks are trading at outlandish prices, driven largely by investors’ thirst for solid, fully franked dividend yields. As the banks’ share prices have risen however, their comparative yields have slowly declined making them less appealing – especially when compared to some of the market’s other dividend payers.

It should also be noted that the banks’ ability to increase or even maintain their current dividends could come under pressure as a result of recommendations made by the Murray Financial System Inquiry. As reported by The ABC, investment bank CLSA has estimated that the banks may have to raise up to $43 billion more in shareholder funds to satisfy tougher capital requirements, which may be partially achieved by dipping into dividends.

This could also cause an average 9.1% hit to earnings per share (EPS) in the next financial year if changes were to occur before then, which could see shares of Commonwealth Bank, Australia and New Zealand Banking Group (ASX: ANZ), National Australia Bank Ltd. (ASX: NAB) and Westpac Banking Corp (ASX: WBC) crumble.

Aside from the banks’ valuation and the effects of the Murray Inquiry, investors also need to consider the macroeconomic outlook. Unemployment is tipped to continue rising while the Aussie dollar is also plummeting, which could see foreign investors increasingly head for the exits.

All in all, it’s fair to say that the lure of the big four banks has certainly eroded over time. Although they still offer decent dividend yields, investors would be far better off looking at some of the market’s other high-yield alternatives.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned. You can follow Ryan on Twitter @ASXvalueinvest.

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