One of the prime talking points on the ASX over 2024 so far has indisputably been the rise of the ASX bank stocks.
Most ASX banks have had a blinder of a year so far. Commonwealth Bank of Australia (ASX: CBA) has hit new record high after new record high. Westpac Banking Corp (ASX: WBC) is up more than 30%. National Australia Bank Ltd (ASX: NAB) and ANZ Group Holdings Ltd (ASX: ANZ) haven't quite matched those gains. But both are still up double-digits this year.
ASX bank stocks are some of the most widely held investments in our market. As such, these gains amongst the biggest banks on the market would have been welcomed by many investors. Even if one doesn't own the banks directly, they may still have benefitted from the flow-on effects via ASX index funds and superannuation accounts.
While some investors may welcome the banks' rise, others might not be as enthusiastic. Rising bank share prices mean falling dividend yields for new investors. Many investors buy ASX bank stocks solely for the dividend income potential. But with CBA now yielding less than 3.5%, for example, much of the income appeal has been blunted.
Value investors probably don't appreciate this rise either. So that brings us to the question of whether it is even possible to find a cheap ASX bank stock right now.
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Are there any cheap ASX bank shares left?
Well, that's a trickier question to answer than it might first appear. It's hard to call CBA, Westpac, or NAB anything except relatively expensive right now. CBA stands out as a potentially overvalued ASX bank, given its low dividend yield and the 17% it has gained year to date despite flat earnings.
However, I would argue that ANZ alone, out of the big four, looks reasonably valued. ANZ has missed out on the gains that its larger peers have enjoyed this year, being up 'only' 14% or so in 2024. This still leaves ANZ with a trailing dividend yield of 5.98% (at current prices), which looks pretty good against its peers. That's despite ANZ's lack of full franking credits these days, though.
So, if I were an income investor looking for an ASX bank stock to buy for dividends today, I would probably go with ANZ. I don't think ANZ is a screaming bargain, but it does look relatively cheap, at least compared to the other ASX bank shares right now.
There are other ASX bank stocks to consider, of course. Bendigo and Adelaide Bank Ltd (ASX: BEN) and Bank of Queensland Ltd (ASX: BOQ) aren't big four banks. As such, they lack the scale of their larger cousins, and thus, some of the quality as an investment.
I would steer clear of Bank of Queensland, given its business doesn't look to be in rude health. This bank has been cutting its dividends for years, and shareholders are still awaiting the results of a turnaround.
Bendigo Bank is on a more solid ground. Even so, its current dividend yield of roughly 5.5% isn't as high as ANZ.
Foolish takeaway
If I were pressed to make a choice on valuations today, balancing the businesses' overall quality, I would probably go with either ANZ or Bendigo Bank.
But make no mistake, I still wouldn't call any of the ASX bank stocks a steal at their current pricing. If you're looking for a truly cheap bank today, you might have no choice but to wait for more steam to come out of this sector. Whenever that may happen.
