Basically inline of market expectations
https://hotcopper.com.au/threads/ann-2025-full-year-results-presentation.8708869/
CBA results
Preview via Motley fool: All eyes will be on Commonwealth Bank of Australia (ASX: CBA) shares today when the banking giant releases its full year results. According to a note out of UBS, its analysts are expecting the bank to report a 3.6% lift in revenue to $28.17 billion and a net profit of $10.27 billion. This is expected to underpin a full year fully franked dividend of $4.75 per share.
CBA Return (inc div) 1yr: 41.47% 3yr: 26.03% pa 5yr: 23.68% pa
story by switzer
Investors cannot predict all things ..hehe - enjoy - just navigate - 'do yah best'
The offshore ETF flood keeps pushing it higher
:Conclusion
Can the CBA share price keep going higher?
This is where things start to get interesting. Because while everyone agrees there’s plenty of money chasing CBA, there’s also no denying that it’s looking pretty stretched right now.
As Liu puts it:
“The best thing it will do is probably just grind higher. It might underperform a bit compared to the rest of the market, but I think the share market overall will go higher. CBA might just grind a bit higher—it is expensive—but I don’t think it’ll have a substantial fall.”
So she’s not calling the top, but also not expecting fireworks.
The valuation tells the story. Right now, CBA is trading on a price-to-earnings (P/E) ratio of 31.77. At that kind of premium, you’re basically paying for perfection. Either earnings need to grow a lot faster than anyone expects, or you need even more capital flooding in to push the price higher. And that’s where things get tougher.
Wayne doesn’t sugar-coat it:
“It does beggar belief in many ways, just looking at the valuation it trades on: relative to its earnings growth and dividend per-share growth, which have been fairly anaemic. There’s no doubt that, relative to other banks globally, CBA is expensive.”
He’s not wrong. While CBA’s business is incredibly solid with dominant market share, strong capital position and reliable dividends, none of that easily justifies 32 times earnings forever. At some point, something has to give: either earnings growth accelerates, or the multiple contracts.
For now though, the flows keep coming. And as long as the rest of the world sees CBA as Australia’s proxy blue-chip, the index-following money keeps piling in.
Hey @Bear77 quoted - 19-June-2022: CBA is Australia's second largest company (behind BHP)
$87 looks a good buy then ..hehehe.
19 - June - 2025 Now CBA in ranked 1st Largest Company.
Below - some CBA stats - borrowed from Market Index.
I can't help myself.. sorry.
Cash profit growth of 2% justifies a PE of 26x? Even with a 5% lift in payout, the dividend yield is still under 3%. Statutory profit growth of 6% looks better, but most of that came from a reduction in impairment charges -- strip that out, and statutory profit growth was just 1%. And let’s not forget, a big part of those lower impairments is thanks to higher home prices inflating collateral values -- this alone accounted for 60% of the drop!
In real terms (inflation-adjusted), profit and revenue actually went backwards.
Ok, so shares are overvalued. That’s not a new or unique take. But why on Earth would they continue a buyback at this kind of premium? They’ve got billions in franking credits just sitting there, yet instead of using them for a special dividend, they’re burning $700 million in shareholder funds to engineer earnings per share growth. Outrageous capital management.
CBA, like the other majors, is basically a giant, overleveraged bet on Australian residential property. About 70% of its loan book is in home loans, and if you include small business loans secured against property, it’s even higher. I’ve made the point before, but a 12% drop in the carrying value of CBA’s loan book would wipe out all their equity. Not saying that will happen (the average LVR is 42%) but risk happens at the edges. Seven percent of home loans have an LVR above 90%, and around $5.5 billion worth of loans are already in negative equity. A small proportion overall, sure, but if all of those defaulted, that’s an 8% hit to CBA’s equity right there.
If there was ever hope for a truly free banking and property market, free from well-intentioned but fatally flawed political interference, i'd short the hell out of this thing. But given the political reality -- this thing is "too big to fail", as is the house of cards its built on -- there's every chance the party keeps rocking for some time yet.
In fact, I note that APRA (at the urging of the treasurer) is considering excluding HELP debts from lending assessments to boost borrowing capacity for first-home buyers, while also easing financing rules for property developers. There's also talk of reducing serviceability buffers..
Firstlinks: Looking beyond banks for dividend income
James Gruber, 20 November 2024
The Big Four banks have had a stellar run over the past 12 months. For instance, Commonwealth Bank (ASX: CBA) is up 56% during the period, and 43% year-to-date. It’s a head spinning move for the ASX’s largest stock with a market capitalization of $260 billion.
Source: Morningstar
Is CBA a $115 billion better business (the equivalent of Westpac's current market capitalisation) than a year ago? Not if you go by earnings, which were down 2% in the last financial year. The prospects for future earnings aren’t impressive either, with most analysts looking for mid-single digit growth over the next three years. And these analysts assume provisions for bad debts remain near all-time lows – a big assumption.
What explains the rampant run-up in bank share prices? ‘Fundamentals’ as we like to call them in the finance industry don’t explain the moves. More likely, it’s liquidity. Mining stocks have been in the doldrums and large fund managers and super funds have essentially been forced to buy the banks to get returns. Passive ETFs have amplified the price rises.
Gone are the good old days
Once upon a time, the banks offered high starting yields (due to lower prices), with steady, growing dividend streams, but that’s now a distant memory. For instance, CBA grew dividends by a compound annual growth rate (CAGR) of 9.2% in the decade to 2003, by 8.9% in the decade to 2013, but by just 1.74% in the decade to 2023. Similarly, Westpac increased dividends by 9% CAGR in the ten years to 2003, by 9.5% in the following ten years, yet dividends declined by 3.1% per annum in the decade to 2023.
The slowing dividend growth is the result of slowing earnings growth, due to a host of reasons. Increased competition for deposits and loans, greater capital requirements, slowing credit and economic growth, and other factors have played a part.
Future earnings growth also looks tepid at best, and consequently so does dividend growth. Even with franking credits, the picture doesn’t appear anywhere near as positive as it did over much of the past 40 years.
Yet, the current share prices don’t reflect this. CBA is sporting a price-to-earnings ratio (PER) of 27.7x, making it the most expensive bank in the developed world, and by a distance. The PERs of the other banks are cheaper, though far from cheap: Westpac (ASX: WBC) at 17.4x, NAB (ASX: NAB) at 17.5x, and ANZ (ASX: ANZ) at 15x.
These high prices have left dividend yields at the lower end of history, with CBA’s yield at 3%, Westpac’s 4.5% NAB’s 4.3%, and ANZ’s at 5.1%.
Looking beyond banks
Banks have been the go-to source of dividend income for investors for years, yet they don’t offer the same prospects for high, growing income that they once did. What should investors do?
The yields on banks aren’t disastrous, so I’m not suggesting that it’s time to cut and run from them. However, it does seem an opportune time to look beyond the banks for better dividend prospects.
Here are some ideas:
Steady compounders. These are potential bank alternatives, offering steady, growing income. I like medical insurers such as Medibank Private (ASX: MPL) and NIB (ASX: NHF), with dividend yields of 4.4% and 5% respectively. Yes, there are risks around hospital cost negotiations, yet these seem to be at least partially priced in. While pricing is set by government, growing demand for private healthcare should ensure increasing earnings and dividends for many years.
Origin Energy (ASX: ORG) is another one in this category. It’s the country’s electricity and gas supplier and its attractive prospects have made it the subject of takeover bids. With a 5.1% yield and reasonable valuations, it deserves a place in income portfolios.
Dividend growers. This group of companies comprises great businesses with relatively low dividend yields but with opportunities to grow those dividends at a brisk clip. Brambles (ASX: BXB) is one, offering a yield of 2.6%, albeit only partly franked. Resmed (ASX: RMD) is another, with a paltry yield of 0.8%, but with a great track record of increasing dividends (more than 7% CAGR over the past ten years). And a personal favourite is Washington H. Soul Pattison (ASX: SOL). It has raised dividends in each of the past 24 years, by 10% per annum. It’s a phenomenal track record that’s unlikely to be repeated. However, the future still appears bright for the conglomerate. Soul Patts offers a 2.7% current dividend yield.
Comeback stories, returning cash. Here are stocks where there is real value and the potential for business turnarounds and for cash to be returned to shareholders. Ramsay Health Care (ASX: RHC) offers a possible opportunity. Better returns should come from an increased focus on its Australian assets. Also, negotiations with insurance funds over costs could prove a catalyst for the stock.
Perpetual (ASX: PPT) is another one. Everyone hates the company given its history. Yet, it’s inexpensive and if a proposed demerger goes ahead, that should result in about a billion dollars finding its way back to shareholders.
What didn’t make the list
There are notable absentees from the stock ideas above. First, there are no miners. I just don’t think miners deserve a large spot in portfolio given their volatile earnings and dividends. Second, the supermarkets are excluded too. Despite recent issues, the shares still seem on the expensive side and dividends aren’t compelling. Government pressure is effectively capping pricing, and they’re still dealing with cost issues.
What about dividend ETFs?
Given ETFs are all the rage, the inevitable question is whether there are ETFs that can provide investors with decent dividend income. My issue with a lot of the dividend ETFs is that they’re loaded with banks and materials companies. For example, the largest dividend ETF, Vanguard’s Australian Shares High Yield ETF (ASX: VHY) has 66% exposure to financials and materials, in line with its benchmark. It’s fine if that’s what you’re looking for. However, if you want to diversify away from banks and miners for yield, then please carefully read the fine print of dividend ETFs.
Are international shares an option?
International shares are an option for those seeking income. However, these shares don’t have the franking credits that are on offer in Australia. For this reason, I’ve always looking for yield in Australia and growth outside of it. It’s a strategy that may not suit everyone and depends on your circumstances.
James Gruber is editor of Firstlinks and Morningstar.
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Source: https://www.firstlinks.com.au/looking-beyond-banks-dividend-income
Disclosure: I do not hold CBA or any bank.
According to Commsec CBA is currently very expensive at 3.58 x book value - possibly the most expensive bank of scale in the world.
The decision to sell if you've held CBA for years is more complex because of things like CGT considerations, and the dividend yield based on your buy price being OK, rather than the current dividend yield now based on where they are trading today - which is low. However, in terms of CBA being a "Buy" up here... Yeah, Nah! Not even close.
When overseas money and then passive funds flow back out of our large banks, there will be significant downside - because there's so far to fall back to book value and also down to an above-market dividend yield.
And with the likely market volatility alongside possible economic risks we're likely to experience in 2025 - including the risk of the A$ falling further against the US$ - our big banks are not going to be as "safe as houses" in my opinion.