Is the CBA share price a buy?

Is the Commonwealth Bank of Australia (ASX: CBA) share price a buy?

Australia’s biggest bank has long been described as the highest-quality compared to its main competitors of Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB).

By sticking to Australia and New Zealand, Commonwealth Bank has generated better returns than ANZ and NAB for shareholders. Australia has proven to be very fertile ground with its consistently growing economy, high employment rate and high level of median wealth.

Commonwealth Bank has done an excellent job of growing shareholder returns – since 2000 the annual dividend per share has grown from $1.29 to $4.31. The entire time it has been paying a dividend at a high yield.

Is Commonwealth Bank still a good shout for income?

With a grossed-up dividend yield of 8.5%, there are few ASX shares that offer a higher stable dividend than that.

The recent half-year result showed that $2 per share dividend was 75.4% of continuing operations earnings per share (EPS), which is high but manageable if 25% of earnings is being retained in the business.

Commonwealth Bank also said that its Common Equity Tier 1 (APRA) ratio was 10.8% at 31 December 2018, which was up from 10.1% at 30 June 2018 and 10.4% at 31 December 2017. It is well capitalised at the moment.

Foolish takeaway

Commonwealth Bank shares have risen just over 3% since the release of the Royal Commission, but are still only valued at under 14x FY19’s estimated earnings. It’s not a bargain, but it’s not exactly expensive either.

If the housing market doesn’t fall by an additional 10% or more than today may actually be a decent time to buy CBA shares. But I wouldn’t want to make that bet right now.

Instead, if you’re looking for other ideas then these large and reliable ASX shares could be much better than CBA.

Top 3 ASX Blue Chips To Buy For 2019

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked...

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2019."

Each one pays a fully franked dividend. The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies move – we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of National Australia Bank 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.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…


The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!