A year ago, many analysts were declaring Commonwealth Bank of Australia (ASX: CBA) shares as overvalued and one to avoid.
In fact, it was noted numerous times that Australia's largest bank was the most expensive bank stock in the world.
In light of this, buying CBA shares in August 2023 didn't seem like a great idea. But was that actually the case? Let's see what a $10,000 investment in the banking giant's shares would be worth today.
Image source: Getty Images
$10,000 invested in CBA shares
This time last year, I could have picked up the bank's shares for $101.84 each.
This means that with a $10,000 investment (and an extra $82.16), I could have added 99 units to my portfolio.
Since then, much to the dismay of bearish analysts, the most expensive bank stock in the world has smashed the market and delivered huge returns. This is great news for its 830,000+ shareholders and superannuation balances across the country.
On Friday, CBA shares ended the week at $139.50. This means that those 99 units I could have bought back in August 2023 would now have a market value of $13,810.50.
That's $3,728.34 more than my original investment!
But wait there's more!
Australia's largest bank is also one of the biggest dividend payers on the Australian share market.
Over the period, CBA has paid a final dividend for FY 2023 of $2.40 per share and an interim dividend for FY 2024 of $2.15 per share.
This is a total of $4.55 per share, fully franked, and would have generated $450.45 of income from my 99 CBA shares.
This brings the total value of my investment to $14,260.95, which is $4,178.79 more than I started with and equates to a staggering total return of 41.4%. This is a stronger return than some of the best ASX growth shares managed to achieve over the period.
It is also significantly better than the market return. Over the same period, the ASX 200 index has generated a total return of 14.9% including dividends.
Where next for the bank's shares?
Unsurprisingly, analysts remain very bearish on CBA's shares and continue to label them as overvalued.
Morgans has a reduce rating and $97.38 price target, Macquarie has an underperform rating and $95.00 price target, and Goldman Sachs has a sell rating and $94.80 price target.
All three price targets imply potential downside of 30% from where the ended Friday's session.
But if history is a guide, it wouldn't be surprising if CBA's shares continue to defy analysts at stay at current levels or even go higher.
