The Australia and New Zealand Banking Group (ASX: ANZ) share price is always worth considering in my opinion.
ANZ is one of Australia's big four banks and one of the biggest businesses in the country. ANZ has prospered over the last two decades due to Australia's economic growth.
Here are three reasons why I think it's worth considering:
Focusing on its domestic operations
ANZ was unique with its strategy after the GFC. It decided to go on an acquisition spree and acquire stakes in several Asian banks. However, the bank is now reducing its exposure to Asia ever since Mike Smith's departure.
Some investors may see this as a negative that the bank is reducing its diversification to the fast-growing Asian region. However, others may argue that ANZ hasn't been able to tap into that growth, its efforts and capital would be better spent on the predictable growth of Australia.
Strengthening of the balance sheet
APRA has just released its latest requirements that will require banks to hold even more capital so that they are too strong to fail.
This move may reduce profitability of the banks but it increases the safety and reliability of the business. If you're a long-term shareholder of banks, you should want your bank to be safe throughout the whole credit cycle, not just in the boom phase.
I don't think investors should allocate even more of their portfolio to the banks because of this, but investors can hopefully feel a bit more reassured about the banks in case of a recession.
Big dividends
ANZ has one of the biggest grossed-up dividends out of all the shares on the ASX200. Its sheer size makes it difficult to grow at a market-beating rate but the grossed-up yield of 7.77% could more than make up for the slow growth.
Investors looking for income could do worse than choosing ANZ shares.
Risks
There is always a risk with banks that they suffer more during a recession than most. ANZ is no exception to this rule.
Foolish takeaway
ANZ is currently trading at 12x analysts' FY18's estimated earnings. This seems quite reasonable, but I'd rather buy bank shares during a recession than at this point in the cycle.
