Should I buy ANZ shares for the 7% dividend yield?

ANZ is standing out from the banking pack right now.

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Looking at the ASX big four bank shares today, and it is immediately obvious that ANZ Group Holdings Ltd (ASX: ANZ) stands out for a few reasons.

Firstly, ANZ shares seem to be the opposite of the 'pick of the bunch' for ASX investors right now. The ANZ share price is currently trading on a sector-trailing price-to-earnings (P/E) ratio of 10.72. For one, that is just behind National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC), which are on earnings multiples of 12.17 and 10.88 respectively.

But it is also far below what the markets are currently asking investors to pay for Commonwealth Bank of Australia (ASX: CBA) shares at present. Today, CBA is on a P/E ratio of 17.54. So it's obvious that ANZ shares are right now the least popular ASX bank.

Secondly, ANZ shares are also offering the largest dividend yield to investors today. CBA trails the pack when it comes to immediate income, offering a trailing dividend yield of 4.31% at recent pricing.

NAB is next with its yield of 5.87%, followed by Westpac's 6.67%.

But ANZ comes in first, with an eye-catching yield on offer of 7.17% today.

So many income investors who love a good dividend might be asking themselves: is it a good time to buy ANZ shares for that fat dividend yield?

Are ANZ shares a buy for that 7% dividend yield?

Well one ASX expert reckons it just might be. As we covered earlier this week, ASX broker Goldman Sachs has given the ANZ share price a buy rating, together with a share price target of $26.66. If that indeed came to pass, it would see ANZ shares gain a healthy 9.3% in share price appreciation alone over the coming year.

Goldman commented that it is eyeing off ANZ given "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 [return on equity]".

But let's talk about dividends, given that's why you're probably here.

Goldman is also expecting big things from this ASX bank stock in terms of income. It has pencilled in a total of $1.62 in dividends per share from ANZ over the 2024 financial year, as well as the two financial years following that.

ANZ only forked out a total of $1.55 in dividends per share across the 2023 financial year. So if Goldman is on the money here, it could mean a big boost for ANZ's income investors going forward.

Motley Fool contributor Sebastian Bowen has positions in National Australia Bank. 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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