Is the Australia and New Zealand Banking Group (ASX: ANZ) share price a buy?
The big bank has been one of the better performing shares this year, the ANZ share price has risen by 9.5% during 2019 and then there was the dividend paid as well.
Investors are questioning which direction the big banks of ANZ, Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd (ASX: NAB) are going to go over the next 12 months.
On the one hand most of the banks are showing rising loan arrears, which might suggest that things are going to get worst for the loan books and bad debts. It takes a while for troublesome loans to work through way through to hurt the bottom line.
But on the other hand there's growing excitement surrounding the property market that the property declines may have ended with a pretty high clearance rate for auctions – although we haven't hit spring yet, which is the main selling season. It will be interesting to see whether it has only been low numbers of properties on the market that helped things over winter.
To me it seems that the banks could actually be one of the better sources of income these days, assuming economic conditions don't deteriorate.
The low interest rates have driven the valuations of many other income shares much higher like Transurban Group (ASX: TCL) and Sydney Airport Holdings Pty Ltd (ASX: SYD). Real estate investment trusts (REITs) have also had a strong run.
I think it might be harder for many listed investment companies (LICs) to pay big dividends because some of their returns rely on capital growth, which could be hard in the shorter-term from this point in time with how where the market values are and the difficult conditions that very low interest rates throw up.
Foolish takeaway
Therefore, the best options for income could be businesses with current good dividend yields which generate the cash profit themselves, rather than relying on asset values going upwards.
But, I'm not sure it's the best time to buy ANZ shares with uncertainty about which direction the economy is going. It's best to buy banks during a recession.
