Charlie Aitken upgrades ANZ

Bell Potter


Charlie Aitken upgrades ANZ. In response to the Chinese rate cut, US Dollar move, and potential RBA cash rate cuts, I am going to upgrade ANZ (ANZ) to a Buy. ANZ has experienced P/E compression due to regulatory capital concerns (Murray Report) and its exposure to Asia. The share price is the same as it was 12 months ago, yet earnings and dividends are up. One of the other reasons for ANZ's underperformance has been its low dividend payout ratio. Yet therein lies the opportunity in ANZ as its peers will most likely be forced to slightly lower dividend payout ratios in the future to build up regulatory capital. ANZ has a strong management team led by CEO Mike Smith and relatively small but highly experienced board led by Chairman David Gonski. Trading on a nearly 6.00% grossed up dividend yield premium to an Australian Government 3yr bond yield I see ANZ as a BUY.

Bell Potter Securities is a leading Australian stockbroking, investment and financial advisory firm that provides a comprehensive offering of financial services to a diversified client base that includes individuals, institutions and corporations.

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