Should you buy Commonwealth Bank of Australia today?

Commonwealth Bank of Australia (ASX:CBA) just got even more popular.

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Shares of Commonwealth Bank of Australia (ASX: CBA) surged as high as $91.94 in the early stages of Wednesday's session after the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) opened a massive 1.6% higher.

The benchmark index climbed above 5,800 points for the first time in nearly seven years, led by some of Australia's biggest stocks in response to yesterday's interest rate cut. Commonwealth Bank rose 1.7%, easily surpassing its previous all-time high of $90.67, before settling back towards $90.70 later in the session.

Commonwealth Bank is considered one of Australia's 'safest' and most reliable dividend stocks. While it is currently sitting on a fully franked dividend yield of 4.4%, it is expected to increase its interim distribution when it reports its earnings on February 11.

Despite the attractiveness of its dividend yield however, investors need to remain wary of its lofty valuation. Trading on a multiple of 16.1 times projected earnings for the 2015 financial year, the stock is trading well above its average long-term price-earnings ratio, which contradicts its somewhat limited growth prospects over the coming years.

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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