ANZ Group Holdings Ltd (ASX: ANZ) shares closed 1.7% higher on Tuesday afternoon, at $37.26 each.
It's great news for investors after the bank's share price fluctuated over the past month as the market adjusted to a new market normal. Throughout March ANZ's share price fell 8.5%.
Despite ongoing global uncertainty, cash rate hikes, and a slowdown in lending, the banking giant's shares are now up 2.3% for the year-to-date and 39% above their trading levels this time last year.
For context, the S&P/ASX 200 Index (ASX: XJO) is practically flat for the year-to-date, and 18.9% higher than 12 months ago.
Despite interest rate headwinds and broad under-certainty across the ASX financial sector, I still think ANZ shares are a great buy.
Here are three reasons why.
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1. ANZ has stable earnings and a predictable cash flow
ANZ is generally considered to have stable earnings and predictable cash flow. This is due to its position as one of Australia's big four banks. The bank has a strong deposit base and a diversified portfolio that means it is relatively defensive in nature.
In mid-February, ANZ posted a first-quarter cash profit of $1.94 billion, up a whopping 75% from the second-half average of FY25. Operating income was up 4% and cash return on tangible equity climbed 11.7% over the quarter.
The news beat expectations, delighted investors and instilled some renewed confidence into the stock. ANZ shares closed at an all-time high following the announcement.
2. It pays a regular dividend to shareholders
ANZ traditionally makes dividend payments to shareholders every six months, payable in July and December. It also offers both a dividend reinvestment plan (DRP) and a bonus option plan (BOP) as alternatives to receiving cash dividends on ANZ ordinary shares.
The bank's most recent dividend was paid out to shareholders in December. It paid 83 cents per share franked at 70%. This brought the total annual dividend to $1.66 per share, at a yield of 4.45%. UBS brokers are projecting a similar payout from ANZ in FY27, resulting in a dividend yield of 4.2% (excluding franking credits).
3. It has a better share price outlook versus some of its peers
Brokers are neutral on the outlook for ANZ shares over the next 12 months. Most have a hold rating with an average target price of $38.01, which implies a potential 2% upside at the time of writing.
Therefore, ANZ has a better share price outlook than its big four bank peers. Brokers hold a strong sell rating on Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corporation Ltd (ASX: WBC) with a 25% and 11% downside respectively.
Brokers have a neutral rating on National Australia Bank Ltd (ASX: NAB) shares but with a smaller 0.08% average upside.
