Could ANZ shares offer big returns for investors in 2024?

This banking giant has beaten the market in 2023. Can it do the same next year?

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ANZ Group Holdings Ltd (ASX: ANZ) shares have been a good investment in 2023.

Since the start of the year, the banking giant's shares have risen approximately 3%.

As a comparison, the ASX 200 index is trading broadly flat year to date.

But the returns don't stop there.

In addition, by the end of the year, ANZ will have paid out a total of $1.75 per share in dividends. This works out to be a 7.4% dividend yield based on its share price at the start of the year.

If things stay the same way, this will mean a total annual return of over 10% for investors in 2023.

But that's this year, what about next year? Could ANZ shares repeat their heroics in 2024? Let's find out.

Outlook for ANZ shares in 2024

The good news for investors is that the team at Goldman Sachs believe that even stronger returns could be on the cards next year.

Last week, the broker retained its buy rating and $26.66 price target on the bank's shares. This implies a potential upside of 9.5% for investors from current levels.

In addition, Goldman is expecting a $1.62 per share dividend in FY 2024. This represents a dividend yield of approximately 6.5%, boosting the total potential return to 16%.

Goldman believes that ANZ's institutional business will be the key to its outperformance. It explains:

We like ANZ given i) the FY23 result provided further evidence of the improving profitability of its Institutional business and in particular we note its Transaction Banking profits have reached an all-time high, while also with improved ROE, ii) we see further upside risk to ANZ Group returns from mix shifts in its Institutional division, iii) our assessment of the profitability of this division concludes that these return improvements are largely sustainable.

Here's hoping the broker is accurate with this one!

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 positions in and has recommended Goldman Sachs Group. 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 Scott Phillips.

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