The Australian share market closed the week nursing a loss despite Friday's bounce, but there is one group of ASX bank shares that could be poised to rally over the next six weeks.
The S&P/ASX 200 Index (ASX: XJO) closed 0.47% higher on Friday. But the index still recorded a drop of around 0.2% for the week as interest rates, the inverted bond yield, and geopolitical tensions cast a shadow over risk assets.
However, barring a 'black swan' event, these headwinds are probably not enough to keep three ASX bank shares from rallying, according to Richard Coppleson from Bell Potter.
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ASX bank shares with a 73% chance of outperforming
There is a trend for the Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price, the Westpac Banking Corp (ASX: WBC) share price, and the National Australia Bank Ltd (ASX: NAB) share price to outperform during this period.
One reason may be due to the fact that all three ASX banks report their interim results in May. Coppleson believes that investors tend to buy these shares ahead of their profit announcement.
"Over the last 25-odd years I have seen it happen again and again – most years – the only exceptions come when there is a big 'global macro' event that is causing markets to be hit across the globe," he said.
"With the Feb reporting season now over and most stocks going ex-dividend around now – investors look to where they can next 'harvest' income from."
These ASX bank shares have a remarkable consistency of closing higher in April and March. Coppleson noted that this has happened 19 times in the past 22 years, or 73% of the time.
He isn't the only one to notice this trend. Other experts have previously reported on this and noted that these shares outperform in the four weeks before and two weeks after going ex-dividend.
This means now could be the time to buy ANZ shares. The bank is the first of the three to hand in its earnings report card, which is due on 4 May.
The $6 billion dividend harvesting season
According to Coppleson, ANZ's ex-dividend date should fall on 10 May. He is forecasting the bank to pay a fully franked dividend of 71 cents a share.
Next to report is NAB on 5 May, which should put its ex-dividend date on 12 May, Coppleson says. The bank is tipped to pay a similar fully franked dividend to ANZ.
The last of the big ASX bank shares to report is Westpac. It is expected to unveil its interim profits on 9 May. Its ex-dividend date should be around 19 May and it is expected to pay a 60 cents a share fully franked dividend.
The combined dividends that the three ASX banks will hand back are likely to reach just over $6 billion.
Just be aware that these banks could underperform thereafter as investors take profit to chase the next dividend harvest.
