Are you fed up with the low interest rates on offer with savings accounts and term deposits? Then you might want to consider putting your money to work in the share market instead.
The Australian share market is home to a good number of dividend shares that provide investors with generous yields.
One of those is Australia and New Zealand Banking GrpLtd (ASX: ANZ).
Why consider buying ANZ shares?
Earlier this month the bank released its first quarter update and revealed a huge improvement in trading conditions.
For the three months ended 31 December, ANZ reported unaudited cash earnings from continuing operations of $1,810 million. This was an impressive 54% jump on the average of the final two quarters of FY 2020. Management advised that this was driven partly by improvements in its net interest margin and flat operating costs.
In addition to this, the bank unveiled a COVID-19 collective provision release of $173 million. It also hinted that there could be more releases in the future depending on how economic conditions fare.
One broker that was particularly pleased was Morgans. In response to this result, it has put an add rating and $31.00 price target on its shares. It is also forecasting a $1.45 per share fully franked dividend in FY 2021.
Based on the current ANZ share price of $26.17, this represents a generous 5.5% dividend yield. It also implies potential upside of 18.5% over the next 12 months.
Looking to FY 2022, Morgans is forecasting a dividend of $1.61, which equates to an even more attractive 6.1% dividend yield.
Who else likes ANZ?
Morgans isn't alone with its positive view on ANZ Bank.
Last week UBS and Credit Suisse retained their buy and outperform ratings and lifted their respective price targets on its shares to $28.50 and $29.50.
The latter is forecasting an even greater dividend of $1.48 per share in FY 2021.
