Was it a good idea to own Commonwealth Bank of Australia (ASX: CBA) shares in 2025?
While it wasn't an incredible year for Australia's largest bank, at least compared to recent years, shareholders are still likely to have been smiling at the end of it.
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What happened with the CBA share price in 2025?
The banking giant's shares ended 2024 trading at $153.25.
At one stage in June, the CBA share price had gone on an incredible run and found itself at a record high of $192.00.
This meant that up to that point, the bank's shares had risen by an impressive 25%. At this point, it was looking like another year of outperformance for its shares despite brokers warning of overvaluation.
That was arguably the time to lock in your gains, because it wasn't too long after reaching this record high that its shares started to head south.
For example, its shares were down at around $151.00 in November following the release of a softer-than-expected quarterly update from the bank. From top to bottom, that's a decline of 21%.
Fortunately, its shares were able to find their legs by the end of the year and recovered to finish the period at $160.57. This means that the CBA share price recorded an annual gain of 4.8%.
However, this was a touch short of the performance of the S&P/ASX 200 Index (ASX: XJO), which rose 6.8% in 2025.
Don't forget the dividends
CBA is one of the nation's biggest dividend payers and 2025 was no exception.
During the 12 months, the bank paid a $2.25 per share fully franked interim dividend in March, followed by a $2.60 per share fully franked final dividend in September.
This represents a dividend yield of approximately 3.2%, which boosts the total annual return to 8%.
That may not be as great as in recent years, but is certainly a decent return all things considered.
What's next for CBA shares?
As was the case in previous years, brokers overwhelmingly believe that the CBA share price could be heading lower in 2026 for valuation reasons.
For example, the team at Morgans has a sell rating and $99.81 price target on its shares. This implies potential downside of almost 40% for investors from current levels. It said:
We've downgraded FY26-28F EPS and DPS by c.3%. Lower earnings also reduces terminal ROTE and sustainable growth in our DCF valuation. DCF-based target price declines to $96.07/sh. We remain SELL rated on CBA, recommending clients aggressively reduce overweight positions given the risk of poor future investment returns arising from the even-now overvalued share price and low-to-mid single digit EPS/DPS growth outlook.
Time will tell if brokers are on the money with their recommendations this year.
