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Should you buy CBA shares before they trade ex-dividend?

This morning GUD Holdings Limited (ASX: GUD) shares and Insurance Australia Group Ltd (ASX: IAG) shares will trade ex-dividend for their latest dividends.

Eligible GUD shareholders will be paid its 25 cents per share dividend on March 1, whereas eligible Insurance Australia Group shareholders can look forward to receiving their 12 cents per share dividend payment on March 20.

Another company which sees its shares trade ex-dividend this week is Australia’s biggest bank, Commonwealth Bank of Australia (ASX: CBA).

The banking giant’s shares go ex-dividend for its fully franked $2.00 per share interim dividend on Wednesday, meaning today is your last chance to buy shares and qualify for it.

Should you buy CBA’s shares for its interim dividend?

If you have limited exposure to the banking sector then I think it could be worth snapping up shares today in order to qualify for this dividend.

However, while I think CBA’s shares are in the buy zone, I do feel that the rest of the big four are far better value. Especially Australia and New Zealand Banking Group (ASX: ANZ) shares.

This is because CBA’s shares are currently changing hands at 13.5x earnings and 1.9x book value and ANZ’s shares are trading at just 10.5x earnings and 1.3x book value. In addition to this, the dividend yield on ANZ’s shares currently stands at 6%, compared to 5.8% for CBA’s shares.

I believe this points to limited upside for CBA’s shares over the next 12 months, whereas I feel ANZ’s shares could climb meaningfully higher from here.

I’m not alone in thinking this way. A note out of Goldman Sachs reveals that its analysts currently have a neutral rating on CBA’s shares with a $71.55 price target, whereas it has ANZ on its conviction buy list with a price target on $29.58.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Insurance Australia Group Limited. 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 Scott Phillips.

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