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.

5 ASX Stocks for Building Wealth After 50

I just read that Warren Buffett, the world’s best investor, made over 99% of his massive fortune after his 50th birthday.

It just goes to show you… it’s never too late to start securing your financial future.

And Motley Fool Chief Investment Advisor Scott Phillips just released a brand-new report that reveals five of our favourite ASX stocks for building wealth after 50.

– Each company boasts strong growth prospects over the next 3 to 5 years…

– Most importantly each pays a generous dividend, fully franked.

Simply click here to find out how you can claim your FREE copy of “5 ASX Stocks for Building Wealth After 50.”

See the stocks now