Why the Bendigo and Adelaide Bank (ASX:BEN) share price is gaining today

Why is the Bendigo and Adelaide Bank share price outperforming the ASX 200 today?

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The S&P/ASX 200 Index (ASX: XJO) is having a great day today, and its first day in the green so far this week (touch wood). At the time of writing, the ASX 200 is up a very healthy 1.17% to 7,337 points. One ASX share that’s doing one better though is the Bendigo and Adelaide Bank Ltd (ASX: BEN) share price.

Bendigo Bank shares are currently up 2.29% to $10.28 a share. Not only is Bendigo Bank outperforming the ASX 200 today, it’s also smashing its larger ASX bank stablemates.

Commonwealth Bank of Australia (ASX: CBA) is currently ‘only’ up 0.96% to $98.55 a share at the time of writing.

Westpac Banking Corp (ASX: WBC) is up a substantial 1.35% to $24.85 a share.

Australia and New Zealand Banking Group Limited (ASX: ANZ) is up 1.83% to $27.82.

And National Australia Bank Ltd. (ASX: NAB) is enjoying gains of 1.67% today to $25.90 a share.

All impressive gains. But not even close to Bendigo Bank’s 2.29% rise.

So why is this ASX bank performing so well today?

Bendigo Bank share price tops ASX banks on Wednesday

Well, it’s not because of any official major news or announcements from the bank. The last announcement out of Bendigo came on 12 July. And that was just some routine paperwork announcing that the bank’s FY2021 full-year results would be released to the markets on 16 August (so put that in your calendar).

Still, there might be a reason for Bendigo’s performance today that we can point to.

There have been many discussions in recent months about the banking sector’s immediate future. Namely, what investors can expect in the way of dividends and share buybacks. All of the major banks have large capital reserves after pulling in their belts last year due to the pandemic-induced recession.

It turns out that this move (which was essentially mandated by the government) was ultimately largely unnecessary, as the Australian economy quickly rebounded from the recession.

As such, most ASX banks have plenty of dry powder which they have the potential to distribute to shareholders. We saw this in action just this week, when ANZ announced a $1.5 billion share buyback program of its own.

My Fool colleague Mitchell highlighted this earlier this month. In fact, he even cited research from broker UBS that showed the broker singling out Bendigo Bank as a “top candidate” for a dividend upgrade. Bendigo shareholders have only enjoyed one dividend payment since March 2020, which was paid out on 31 March this year.

Perhaps investors are expecting big things when it comes to dividends and buybacks next month.

At the current share price, Bendigo and Adelaide Bank has a market capitalisation of $5.63 billion, a price-to-earnings (P/E) ratio of 21.9 and a trailing dividend yield of 2.72%.

Should you invest $1,000 in Bendigo and Adelaide Bank right now?

Before you consider Bendigo and Adelaide Bank, you'll want to hear this.

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Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank Limited. 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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