With its shares changing hands at 14.5x trailing earnings and 2.2x book value, I think that the Commonwealth Bank of Australia (ASX: CBA) share price is about fair value and would class it as a hold.
In light of this, I think investors should look elsewhere for dividends.
Two dividend shares that I feel would be great alternatives to Australia's largest bank are as follows:
G8 Education Ltd (ASX: GEM)
Despite a strong rise in its share price over the last few months, this childcare operator's shares still provide a solid dividend yield. G8 plans to pay a fully franked 20 cents per share dividend in FY 2018, which works out to be a yield of 4.5% at the current share price. Furthermore, thanks to favourable changes to childcare funding and its recent acquisitions, I believe the company is in a great position to grow both earnings and its dividend at an above average rate over the next few years.
WAM Capital Limited (ASX: WAM)
When it comes to listed investment companies there are few better than WAM Capital in my opinion. Thanks to the continued outperformance of its funds, the company has managed to raise its dividend for eight years in a row. Judging by its performance so far this year, I would expect the company will make in nine years in a row in FY 2018. While there may be cheaper LICs out there, I'd rather pay a premium to own a quality one. Especially when its shares provide a trailing fully franked 5.3% dividend.
