The Commonwealth Bank of Australia share price is on the move

The Commonwealth Bank of Australia (ASX: CBA) is up nearly 5% in the past month, surging to trade at around $83.00 currently.

Peers Australia and New Zealand Banking Group (ASX: ANZ), National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC) are also trading higher compared to a month ago, but not as well as CBA.

Bank share prices Jul 2017

Source: Google Finance

John Abernethy, Chief Investment Officer at Clime Asset Management says the banks will realise that their dividend payout ratios are too high and that retained earnings is their most sensible capital management approach. If that plays through, bank shareholders will need to get used to lower dividends and dividend yields.

Commonwealth Bank currently yields 5.1% at the price of around $83, but that will fall below 5% if the dividend is cut – although the share price could also get hammered as investors sell out in favour of other income plays.

With the risks rising of bank dividends being cut, Foolish investors should ensure they have exposure to a diversified array of dividend payers – not just the big four banks.

Are you planning on a blue-chip retirement?

If term-deposit rates stay low your lifestyle expectancy could stay low with them.

But you must act now. This updated report is available for a limited time only, and your copy is 100% FREE. So don't miss out!

At The Motley Fool we know share markets can be volatile with President Trump and the great unknown of China front and centre. So we've handpicked 5 of our favorite term-deposit-crushing dividend shares to make your savings work for you.

Simply click here to receive your free copy of "Our top 5 ASX higher income shares for financial year 2018" right now.

Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has a position in National Australia Bank Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.