Australia and New Zealand Banking Group (ASX: ANZ), or ANZ, has delivered exceptional returns for shareholders over the past 15 years.
15 years ago, ANZ's share price was $12.32. Since then, it has increased at an average rate of 11.5% per year and an additional $17.83 has been paid out in dividends.
Like its peers Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC), ANZ has thrived off continuous economic growth, bulging household debt levels and a robust property market here in Australia.
However, some financial commentators are now growing cautious of the local property market and suggest the current growth rates cannot be sustained. Meanwhile, household debt levels stand at record highs.
Further, as we wrote here, ANZ shares are richly priced and investors choosing to buy now likely have little – if any – margin of safety.
Is ANZ a hold or sell?
An expensive share price isn't always a bad thing. Indeed, investors planning to hold their shares for the long term will likely be reluctant to sell so long as ANZ continues to pay its great dividend.
Here are three reasons why ANZ deserves to stay in your portfolio for the long term:
- Dividends. As noted above, ANZ has an excellent track record for returning excess cash to shareholders. In the next year, it is forecast to pay a full year dividend of $1.84 per share.
- Growth. Although demand for credit is expected to slow in Australia, ANZ is the only major bank actively seeking to expand and compete in booming Asian markets.
- Defensive. ANZ is considered by the banking regulator (APRA) to be a Domestically Systemic Important Bank and is therefore required to adhere to stringent liquidity measures. Ultimately, this affords its customers and shareholders an added layer of safety in the event of an economic downturn.
A better dividend stock than ANZ
