Bank shares might be derided by some as "boring", but there is no denying they are reliable dividend payers.
On the ASX, investors are fortunate enough to have some giant income-producing financial institutions to choose from. There are the big four, smaller regional banks and Macquarie Group Ltd (ASX: MQG), to name a few.
But which are the best to buy right now?
Shaw and Partners portfolio manager James Gerrish had a couple of ideas in his Market Matters Q&A.
'The best technology and capital efficiency'
For Gerrish, there is no doubt which is the best dividend stock out of all the ASX bank shares.
"Commonwealth Bank of Australia (ASX: CBA) — market cap of $154 billion — is a housing-focussed bank. The best in the sector by a large margin, and our go to."
But he added that this quality comes at a high stock price.
"It's the most expensive, however, the returns they have achieved over time mean that its place at the top of the tree is well justified," said Gerrish.
"They have the best technology and capital efficiency and these are important."
Gerrish's team owns CBA shares in its income portfolio.
"[It's] a core holding that we up weight/down weight but rarely sell."
Commonwealth shares are currently trading at a price-to-earnings (P/E) ratio of around 18 with a dividend yield of 3.98%.
The CBA share price is down 5.7% year to date.
The big improver
If you have CBA in the portfolio, then Gerrish reckons National Australia Bank Ltd (ASX: NAB) is a nice counterweight.
"NAB (market cap of $90 billion) is more of a commercial/business-focussed bank," he said.
"[It] has been the big improver in recent years and we have identified NAB as our number two pick in the sector, while viewing it as complementary to a holding in CBA."
The Motley Fool's Tristan Harrison last week was full of praise for NAB shares, labelling it a "Warren Buffett" style investment.
"I think that Buffett will always want to buy businesses when he thinks they're good value. But, I also think he'd want to choose investments that are quality," said Harrison.
"In my opinion, NAB is a high-quality bank. One example can be seen in the profit NAB has achieved this year despite the headwinds of competition."
Certainly, National Australia Bank has quite a few fans at the moment. According to CMC Markets, seven out of 14 analysts currently rate it as a buy. Six of those recommend it as a strong buy.
The NAB share price is up 3.3% so far this year, giving it a PE ratio of 15.4. Its dividend yield stands at 4.6%.
