Is the Australia and New Zealand Banking Group (ASX: ANZ) share price a buy for the 8% dividend yield?
What a difference a week makes! A week ago the banks seemed on course for months more of troubles but now there's lots of positive signs.
No negative gearing. Lower interest rate buffer from APRA. An expected lower interest rate from the RBA.
What's more is that shareholders get to keep their franking credit refunds from all ASX shares like Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd (ASX: NAB).
Suddenly the outlook looks more positive for developers, construction materials businesses etc. Or so commentators are saying.
I'm unsure about whether everything can be fixed so easily. Businesses were finding it tough whilst the Morrison government was still in power before the election, so nothing has changed in terms of who is in charge.
The tax reductions and increased tax offsets for taxpayers may provide a boost, and a lower APRA interest buffer could be useful.
But, it is ANZ's current loan book which is seeing rising mortgage arrears of more than 90 days. Will a slight decrease of the RBA interest rate really help out that situation? Only time will tell.
Tight household budgets and low wage growth are still problems and residential property construction jobs could still come under pressure.
Foolish takeaway
I truly hope that things do turn around, no-one wants a recession. But I'm not ready to believe that ANZ's shorter-term earnings prospects are that much better than last week.
The only key difference is that investors will still receive their franking credit refunds, leading to a grossed-up dividend yield of 8%. This seems like a solid yield, but I would prefer to own ASX shares with a more dependable dividend.
