Is ANZ (ASX:ANZ) stock price a buy for the 7.3% dividend yield?

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Is the Australia and New Zealand Banking Group Ltd (ASX: ANZ) Is the stock price worth buying for its dividend yield?

Lots of investors do thinks ANZ shares are a buy. Since February 7, 2022, ANZ is up 6%.

How big will the dividend be at the current ANZ share price?

The bank is expected to pay a sizeable annual dividend in FY22. Commsec figures imply that the premium dividend yield will be 7.3%.

Some analysts have very similar dividend expectations. Morgan Stanley also estimates that ANZ will pay a premium dividend yield of 7.3%. Ord Minnett also estimates that ANZ will pay a premium dividend yield of 7.3%.

One of ANZ’s biggest dividend estimates comes from Citi – the premium dividend yield could be 7.8%.

So many estimates of the ANZ dividend yield are somewhere in the high 7s.

Latest performances

Investors often like to judge the ANZ share price on the latest earnings and performance comments. For ANZ, he gave a market update on February 7, 2022 for the three months to December 31, 2022.

ANZ said the group’s net interest margin (NIM) was down 8 basis points for the quarter, with the underlying NIM down 5 basis points. He blamed this on structural headwinds affecting the sector.

But there could be good news ahead – the impact of rising rates, mainly in New Zealand, and recent changes in deposit prices should dampen the headwinds underway in the second quarter.

The big four ASX banks also said they had made solid progress in Australia to improve systems and processes for simple home loans with application times now in line with other major lenders. Last year, ANZ lost market share, in part due to lengthy loan processing times. Efforts continue to improve response times for more complex home loan applications.

The Australian home lending balance sheet increased slightly in the first quarter of FY22. Attrition and margin management is a key area of ​​focus due to high levels of refinancing activity in the industry.

Revenue from the ANZ Markets business was weak in October but performed in line in the following months.

The costs of “operating the bank” should be stable overall in the first half.

The credit quality environment remained favorable with a total provision release of $44 million during the quarter.

ANZ said its capital position continues to provide the flexibility to return more excess capital to shareholders and that ANZ is considering increasing the size of the current takeover in the market.

Is the ANZ share price a buy?

Morgan Stanley views it as a buy, with a price target of $30. The decline in NIM was a bigger drop in the last quarter than the broker expected. But a recovery in margins, as ANZ indicates, would help.

Ord Minnett considers it a buy, with a price target of $30.50. He sees revenue growth for ANZ. The broker prefers ANZ to Westpac Banking Corp. (ASX: WBC).

However, the broker with the highest dividend estimate, Citi, is only “neutral” on the bank with a price target of $29.25.

Richard L. Militello