Before the coronavirus pandemic spooked investors in February, I think Commonwealth Bank of Australia (ASX: CBA) was arguably the top ASX dividend share on the market.
The CommBank share price was approaching its all-time high and pushing towards the $100 per share mark. However, the February/March bear market changed all that and sent the S&P/ASX 200 Index (ASX: XJO) tumbling lower.
Since bottoming out in mid-March, however, CommBank's shares have surged in value. In fact, the Aussie bank is currently worth a whopping $121.4 billion and is one of the largest ASX companies by market capitalisation.
So, despite a bank dividend cut and other headwinds, could Commonwealth Bank still be the best ASX dividend share going around?
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Why CommBank is still a top ASX dividend share
I think it's worth remembering that a top ASX dividend share doesn't actually have to be paying a dividend right now.
CommBank paid out an interim dividend of $2.00 per share just before APRA piled the pressure on the Aussie banks. While we could well see little or no dividend in August, this shouldn't be a big issue for long-term investors.
Let's assume the Commonwealth Bank share price more or less represents the present value of its future cash flows. That means investors are trying to value CommBank based on its long-term future prospects.
If we take one dividend payment out of a discounted cash flow (DCF) model for the banking giant, it shouldn't affect its value too much. This means it's not worth panicking about the prospect of no dividends being announced in August.
Is Commonwealth Bank the best buy on the market?
According to the ASX, CommBank shares are yielding 6.08% as of Monday's close. Of course, that number could theoretically be zero if the bank declines to pay a distribution to shareholders.
I think in the long-term, though, Commonwealth Bank remains one of the best ASX dividend shares. Despite competition from neobanks and offshore competitors, CommBank still churned out a $4.5 billion profit in February.
If you're after a steady income stream in the short-term, however, CommBank may not be for you. Instead, you may prefer to take a look at some other ASX dividend shares such as Harvey Norman Holdings Limited (ASX: HVN) which is even paying a special dividend in 2020.
