ANZ – Cut in Dividend Helps Share Price

By Jason Fittler

ANZ has come out with a half year report in line with expectations.

However, the big surprise was the 25% cut in their dividend.

Despite this bad news the share price rose a healthy 4.4% on the day.

Let’s take a closer look, even after the cut in dividend ANZ is on a yield of 8% plus they are also the only major bank not to have come to the market to raise capital. It would seem that they have taken the old fashion approach to paying down debt and paying dividends.

The market was clearly happy with the stock pushing the price of the stock back above $13 per share. The volume on the day was 3.5 times larger than the volume leading up to the result. I take this as a bullish view on the stock.

ANZ like all of the major banks has a long way to go.

It has flagged a $3 Billion cash earnings for the financial year 2009 which is slightly below market expectations.

Their bad and doubtful debts estimate was in line with expectations but there is some fear that this could move higher in the coming year as the Australian economy continues its current economic woes.

In summary: I have a positive view on the stock and on Australian banks in general. I fully expect to see the financial sector lead the way for the recovery, be it in 2 months or 2 years.

For me holding some ANZ in your portfolio at an 8% yield would be a positive.  

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