Top-10 ASX dividend share delivers market-thumping share price gains

The Holy Grail for income stocks is to return strong capital gains as well

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It’s one thing to receive a sizeable income stream from an ASX dividend share. And it’s another thing to see its share price thump the benchmark.

But it’s not all too often that you find an ASX dividend share doing both.

Which brings us to today’s market-thumping ASX dividend share, Australia and New Zealand Banking GrpLtd (ASX: ANZ).

How has ANZ performed?

Last month I penned an article detailing the 10 ASX dividend shares paying the highest yields.

ANZ came in at the low end of the top-10 list in terms of its dividend yield. But it’s the only company in the elite group that has beaten the returns of the S&P/ASX 200 Index聽(ASX: XJO) by more than 100%, both over the past 12 months and year-to-date.

First, let’s look at the dividends.

At the current price of $27.26 per share, ANZ pays a trailing dividend yield of 3.82%, fully franked. In the current low interest rate environment, where you’ll be pleased to get 0.6% off a term deposit, that’s pretty solid. And ANZ has already covered your tax burden. (That’s the franking bit.)

ANZ also has continued to make its 2 annual dividend payments throughout the COVID-19 crisis. The most recent interim payout of 70 cents per share was delivered to shareholders on 1 July.

But atop paying a regular income stream, one that made our top 10 ASX dividend share list, ANZ shareholders have also enjoyed some market-thrashing share price gains.

ANZ’s share price gains more than double the ASX 200

A common trap for investors seeking income from ASX dividend shares is focusing solely on the dividend yield.

While that yield is obviously important, it doesn’t tell the whole story. That’s because the payout ratio is directly related to the share price. Meaning a trailing dividend yield can look quite juicy if a company’s share price has taken a big fall.

If a company’s share price has been falling, it’s worth researching the matter to see if you’re likely to see more capital losses in the months ahead.

This certainly has not been the case with ANZ. This top-10 ASX dividend share has gained 49.2% over the past 12 months. By comparison, the ASX 200 has gained 20.8% since this time last year.

ANZ has continued to outperform in 2021. Year-to-date the share price is up by 18.1%, more than double the 8.4% gains posted by the ASX 200.

Homing in on today’s share price action, the ASX 200 is down 0.29% in afternoon trade while the ANZ share price is up 0.74%.

The company is stirring investor interest after announcing a $1.5 billion share buy-back.

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The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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.

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