Should you buy ANZ (ASX:ANZ) shares in October for the dividend yield?

Is this bank share in the buy zone?

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If you’re an income investor and don’t already have meaningful exposure to the banking sector, then the Australia and New Zealand Banking GrpLtd (ASX: ANZ) dividend could be worth considering.

That’s the view of one of Australia’s leading brokers.

Why might the ANZ dividend be a good option?

According to a recent note out of Bell Potter, its analysts are very positive on the big four bank and expect the ANZ dividend to grow at a decent rate in the coming years.

The broker has pencilled in a fully franked $1.30 per share dividend in FY 2021. After which, it is forecasting increases to $1.40 per share in FY 2022 and then $1.50 per share in FY 2023.

Based on the current ANZ share price of $27.87, this will mean yields of 4.7%, 5%, and 5.4%, respectively, over the three financial years.

But the returns don’t stop at the ANZ dividend. Bell Potter also sees decent upside for the bank’s shares over the next 12 months.

Where is the ANZ share price heading from here?

The note reveals that Bell Potter currently has a buy rating and $31.00 price target on the company’s shares.

Based on where the ANZ share price finished the week, this suggests that there’s potential upside of 11% for investors. And if you add the ANZ dividend into the equation, the total potential return stretches to approximately 16%.

That’s not bad at all considering the ANZ share price is already smashing the market in 2021. Its shares are up an impressive 21% since the start of the year compared to a gain of 10% for the ASX 200.

Fortunately, judging by what Bell Potter is saying, it doesn’t appear to be too late for income investors to pick up shares when the market reopens next week.

Should you invest $1,000 in ANZ right now?

Before you consider ANZ, you'll want to hear this.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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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