Commonwealth Bank of Australia (ASX: CBA) stock could be on its way to hitting $100 this year, driven by the market's intense interest in high-yield dividend stocks.
Although shares of Australia's largest bank are trading at a rather outlandish price of $93.22 – within 1% of their all-time high – some analysts are becoming increasingly bullish on the stock in the near term. Credit Suisse, for instance, increased its target price to $96 from $85 while analysts from Macquarie are confident it can hit $99 within 12 months.
As reported by the Fairfax press, Macquarie analyst Mike Wiblin upgraded his earnings expectations on the bank after it reported a $4.62 billion half-year profit last week, saying that Commonwealth Bank tended to perform better than its rivals in a falling interest rate environment. The bank's stock has risen more than 26% since October and would only need to jump another 7.3% to hit that $100 target.
While the market's hunger for solid dividends could push the stock higher in the near-term, investors need to remain cautious of the high premium commanded by the shares in relation to their rather limited medium-term growth prospects. With interest rates set to fall even further, investors may be better off exploring some of the market's other high-yield dividends stocks instead.
