Is the Commonwealth Bank (ASX:CBA) share price a buy or hold?

The Commonwealth Bank share price is slipping today, but remains well in the black for the year. Are Commonwealth Bank shares a buy or hold?

| More on:
A hand outstretched with questionmarks floating above it, indicating uncertainty about a ahreprice

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Commonwealth Bank of Australia (ASX: CBA) share price is down 0.58% at time of writing. That's right in line with the broader S&P/ASX 200 Index (ASX: XJO), down 0.51%.

Commonwealth Bank's shares have underperformed the other big 4 banks over the past 12 months, with shares up 28% since 17 March 2020.

Australia and New Zealand Banking Grp Ltd (ASX: ANZ) leads the big 4, with the share price up 54%

National Australia Bank Ltd (ASX: NAB) comes in a close second, with shares up 51%

And the Westpac Banking Corp (ASX: WBC) share price has gained 42% in 12 months.

So is the Commonwealth Bank share price a buy or hold at today's level?

That depends on who you ask and how far along you think the ASX 200 is on the reflation curve.

Commonwealth Bank shares a hold

Romano Sala Tenna is the portfolio manager at Katana Asset Management. And he believes that the big 4 banks, all up significantly in 2021, are fully valued. As the Australian Financial Review points out "the ASX banks index is up almost 20 per cent since the start of the year".

That has Sala Tenna keeping a careful eye on Katana's bank share holdings. He said:

Momentum is still there, sentiment is still there, so we are happy to hold [the big 4 banks] for the course. But once we think that sentiment and momentum changes, we will move to the door on those as well.

Commonwealth Bank shares a buy

Plato Investment Management managing director Don Hamson has a different take on Commonwealth Bank shares. And that's all to do with its juicy dividend potential.

Out of the big 4 banks Hamson picks Commonwealth Bank as the top income investing share.

According to Hamson:

Its $1.50 dividend equates to only 67% of earnings and the bank has said its pay-out ratio is likely to be 70 to 80% this year, so a stronger second-half dividend is expected. There's also the possibility management will use excess franking credits to undertake an off-market buyback in the coming year, which will be a lucrative opportunity for retirees in particular.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Share Gainers

These were the best-performing ASX 200 shares in March

These shares made their shareholders smile in March thanks to some very big gains.

Read more »

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
Opinions

2 ASX shares I have been buying in 2024!

I’m a believer in the long-term outlook of these stocks.

Read more »

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today

These ASX shares are ending the week in the red. But why?

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

a young boy dressed up in a business suit and tie has a cute grin and holds two fingers up.
Opinions

2 of my top ASX 200 shares to consider buying before April

I would happily exchange dollars for these two shares right now.

Read more »