The Royal Commission is over and a lot of the banks can let out a sigh of a relief, so are the ASX bank yields now too big to ignore?
Not every banker got off without any repercussions, with National Australia Bank Ltd (ASX: NAB) losing its CEO and Chairman for their lacklustre appearances in the Royal Commission and the criticism they received in Commissioner Hayne's report.
However, as Westpac Banking Corp (ASX: WBC) reported this morning, bank profits are managing to tread water. As Telstra Corporation Ltd (ASX: TLS) is showing, a dividend is only as safe as its profit. But, seeing as profits are relatively stable, the bank dividends could be options for income-seekers.
Based on the last year of dividends:
NAB has a grossed-up dividend yield of 11.7%.
Westpac has a grossed-up dividend yield of 10.2%.
Australia and New Zealand Banking Group (ASX: ANZ) has a grossed-up dividend yield of 8.5%.
Commonwealth Bank of Australia (ASX: CBA) has a grossed-up dividend yield of 8.7%.
For both NAB and Westpac to offer yields above 10% is surprising and attractive. A major reason why the yield is so high is simply that the share price has come down. There is of course a risk that a dividend cut could occur.
The dividends of smaller banks are less consistent, but also worth considering in this article.
Bank of Queensland Limited (ASX: BOQ) issued a profit warning today, but it has a trailing grossed-up dividend yield of 11.6%.
Bendigo and Adelaide Bank Ltd (ASX: BEN) has a grossed-up dividend yield of 10.2%.
MyState Limited (ASX: MYS) has a grossed-up dividend yield of 8.9%.
Suncorp Group Ltd (ASX: SUN), which runs a bank, has a grossed-up dividend yield of 8.1%.
Foolish takeaway
Arguably this is currently the best time to buy bank shares for a number of years with all of the big dividends on offer. If I could only pick three it would be NAB, Westpac and Bendigo Bank. But, I personally won't be considering buying banks until we're in the depths of another recession.
