There’s little doubt that the Aussie banks have underperformed expectations – and the S&P/ASX 200 (INDEXASX: XJO) – in 2019.
The Macquarie Group Ltd (ASX: MQG) share price is the only one of the ASX banking stocks that has outperformed the ASX 200 this year.
Amongst the under performers, Commonwealth Bank of Australia Ltd (ASX: CBA) leads the way with a 13.88% gain. National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group Ltd (ASX: ANZ) have both only seen single digit growth in 2019.
That being said, here’s why I think ANZ shares could be the best of the Aussie banking stocks in 2020.
Why ANZ could be the best ASX banking stock
Investing is always a trade-off between risk and return.
In that sense, ANZ has a great case as the best ASX banking stock to buy ahead of next year.
Westpac Banking Corp (ASX: WBC) shares have been smashed in recent weeks as its AUSTRAC scandal rolls on.
Westpac is alleged to have committed 23 million breaches of Australian anti-money laundering and counter-terrorism financing laws.
The revelations have destroyed the bank’s capital gains as it faces over $1 billion in fines, not long after Commonwealth Bank’s $700 million AUSTRAC fine.
However, ANZ has sailed through unscathed, as its long-term prudence in risk management looks to be paying dividends.
Given the Aussie banking sector has underperformed as a whole in this year, ANZ’s performance may not be that bad.
Its status as a Big Four bank already gives it huge potential for growth. The non-major banks have struggled for years to break open the Big Four “cartel”.
ANZ’s dividend yield of 6.44% is also very handy, particularly given it hasn’t been inflated by share price declines.
Is now the time to buy ANZ?
I think ANZ could be the best ASX banking stock, but I wouldn’t be buying in just yet.
The banking sector is faces challenges on several fronts, including regulatory pressure and low interest rates.
With profitability slipping in FY19, I don’t have high hopes for the Aussie banks in 2020.
However, if you’re after a high-yield dividend stock that is minimising its individual risk, ANZ looks to fit the bill right now.
If you want some options outside of the banks, check out these 3 high-yield stocks today!
When Edward Vesely -- our resident dividend expert -- has a stock tip, it can pay to listen. With huge winners like Dicker Data (up 147%) and Collins Food (up 105%) under his belt, Edward is building an enviable following amongst investors that are planning for retirement.
In a brand new report, Edward has just revealed what he believes are the 3 best dividend stocks for income-hungry investors to buy now. All 3 stocks are paying growing fully franked dividends giving you the opportunity to combine capital appreciation with attractive dividend yields.
Best of all, Edward’s “Top 3 Dividend Shares To Buy For 2020” report is totally free to all Motley Fool readers.
Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. 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.