2024 has been a phenomenal year for almost every ASX 200 bank stock, including ANZ Group Holdings Ltd (ASX: ANZ) shares.
Most of us would know about Commonwealth Bank of Australia (ASX: CBA) shares' seemingly endless parade of new all-time record highs.
But it's not just CBA. National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC) and ANZ have all enjoyed double-digit share price gains over the year to date. Additionally, all three have seen new 52-week highs in recent months.
Saying that, ANZ shares have still been a conspicuous laggard.
To illustrate, let's look at the numbers. At the time of writing, CBA shares have enjoyed a 40% rise over the 2024 calendar year. NAB shares have lifted 30%, while Westpac stock has climbed 47%.
ANZ trails the pack, though, with a year-to-date gain of 24%. Yep, even though ANZ shares have risen from $25.99 each to the $32.26 we are seeing at present, this bank's investors might be feeling a little shortchanged.
See for yourself below:
So, we can definitively conclude that ANZ has been the worst investment of the major banks in 2024 despite the nominally impressive return. But does this mean that ANZ shares present the best value for investors today?
Are ANZ shares the best ASX 200 bank buy for value right now?
Well, it certainly seems that way on the surface. Right now, ANZ shares are trading on a price-to-earnings (P/E) ratio of 15. That means the market is willing to pay $15 for every $1 of earnings ANZ brings home.
In contrast, Westpac and NAB shares are currently on P/E ratios of 17.65 and 17.74, respectively. And CBA is far out in front with its lofty (to put it generously) and unbank-like earnings multiple of 28.02.
This paradigm is reflected in each of these banks' dividend yields. Remember, as a company's share price rises, its dividend yield tends to fall if the bank can't compensate with commensurate dividend hikes.
That's why we see CBA shares with a (again, unbank-like) yield of 2.92% right now, compared with ANZ's far more conventional 5.15%.
So, what can we make of this situation?
Buying for quality or yield?
Well, I tend to think of ANZ as the most challenged of the big four banks today. ANZ simply does not seem to have developed its business model to the same high calibre as NAB and CBA. Its earnings have been stagnant for a while now, and ANZ lacks the size and scale of CBA. As such, it arguably deserves to trade on a lower earnings multiple than its larger rivals. As such, I don't see it as a screaming value investing buy.
Saying that, I still regard this ASX bank share as a decent income investment. Whilst CBA has lost most of its firepower as a dividend share, ANZ's 5%-plus yield makes it a compelling investment for passive income, particularly for those investors who invest primarily for dividends. ANZ has a long history as a reliable dividend payer. Investors haven't endured a heavy dividend cut in quite a while, with the excusable exception of COVID-ravaged 2020.
In conclusion, I would happily buy ANZ shares today for a diversified, dividend-focused income portfolio. But otherwise, I think there are better value opportunities out there.
