Commonwealth Bank of Australia (ASX CBA) is Australia’s largest bank list on the ASX and largest financial institution in the ASX Top 20. It is a predominately a retail bank with the largest domestic residential lending book out of all big 4 banks. It also owns Australia’s largest broker, Commsec and major asset manager Colonial First State.
Commonwealth Bank share is staple of many retail investor portfolios and with good reason. CBA dividends has steadily increases overtime. The bank is mostly well managed bar few scandals.
Unlike other big 4 banks like ANZ stock with a focus on Australia and Asia regional strategy. CBA shares are attractive to many because of its pure Australia exposure.
CBA Dividend History
Chart below the annual CBA dividends since 2006. With the exception of 2009, management have increased dividends every year in the last 10 years. The total dividend per share in 2015 was 88% higher than 2006. Investors would have received the benefit of franking credits as well.
CBA dividend history shows that overtime, earning growth can be considered more important than the dividend investors receives today. As earnings increase over time with the effect of compounding. The company will have the ability to increase dividends as well. The increase over time above is a perfect example of this.
This is why when we are looking for additions to our portfolio. A key criteria for investing in shares in our portfolio is the companies earning power, the ability to maintain earnings and increase over time. An example of this in financial service space is ASX CGF.
CBA Dividend Dates 2017
Interim Ex-Dividend Date: 22/2/2017
Interim Record Date: 23/2/2017
Interim Dividend Payment Date: 4/4/2017
Final Ex-Dividend Date: 16/8/2017
Final Record Date: 17/8/2017
Final Dividend Payment Date: 29/9/2017
Key risks to Commonwealth Shares
The bank is the largest residential writer in Australia. Any slow down in residential housing prices especially in key Sydney and Melbourne markets would pose risk to the bank. Auction results sydney today shows signs of resilience given the low interest rates. However we will be keeping an eye on this going forward.
It holds largest market share in key retail product. As the market is structured with advantage to existing big 4 banks. The bank will be one of the biggest losers as its current market share is for it to lose. However see its strong investment in technology and production innovation for consumers to access their account, credit and investments as key comparative advantage.
CBA Shares Performance
The chart above shows the return of Commbank shares verses the other major banks listed on the ASX year to date.