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Are these alternative ASX banking shares the best dividend stocks for yield?

There are alternative ASX banking shares that could provide a good dividend yield.

It’s true that Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB) all offer good potential dividend yields, but they aren’t the only ones that could be considered. And the big four banks are all quite similar. 

The second-tier banks also could be options to think about.

Look at Bank of Queensland Limited (ASX: BOQ), Bendigo and Adelaide Bank Ltd (ASX: BEN), MyState Ltd (ASX: MYS) and Suncorp Group Ltd (ASX: SUN).

BOQ has a grossed-up dividend yield of 11%.

Bendigo Bank has a grossed-up dividend yield of 8.7%.

MyState has a grossed-up dividend yield of 8.8%.

Suncorp has a grossed-up dividend yield of around 7% excluding special dividends.

As you can see, these yields are on par with the yields offered by the big banks and arguably are less at risk of being cut like we saw from NAB because the regional banks haven’t faced the same amount of customer remediation relating to financial advice as the big banks.

Also, they seem to be under less pressure to increase their capital levels, particularly as they don’t have large New Zealand subsidiaries like the big four ASX banks. The Reserve Bank of New Zealand (RBNZ) wants the big ASX banks to hold more capital.

If you were to invest in Suncorp then you’d also be getting exposure to the insurance business, so for that reason I don’t think I would want to invest in it.

With the remaining choices you’re getting a larger exposure to either Queensland, Tasmania or Victoria & South Australia.

Foolish takeaway

Thinking about those state exposures I’d put Tasmania top, meaning I prefer MyState, but I think BOQ and Bendigo Bank are both worthy contenders too for dividends.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of MyState Limited and 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.

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