The ANZ Group Holdings Ltd (ASX: ANZ) share price has fallen more than 10% in the past decade. However, this ASX bank share has been boasting a large dividend yield for many years, offsetting the decline.
I think it's fair to say ASX bank shares are unlikely to deliver significant capital growth because of the nature of mortgage lending, and how large those businesses already are. Still, it's disappointing for the ANZ share price to go backwards over such a long period.
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What have the returns been?
The total shareholder return measure combines both the share price return and the dividend.
According to CMC Markets, ANZ shares have returned a total of 2.5% per annum over five years and 4% per annum over the past 10 years.
Given the ANZ share price is down just over 10% for both of those periods, we can tell it's the dividend return that has created those positive returns.
Ideally, an ASX dividend share will deliver both capital growth and dividends. However, I don't think there's much point in getting a 5% dividend yield if the share price falls 10% or 20%.
That said, it may be a little unfair to judge ANZ at this time considering its share price has been a lot higher during much of 2021 and 2022.
Could now be a good time to invest in ANZ shares?
ANZ is predicted to pay an annual dividend per share of $1.62 in FY24, according to Commsec. That translates into a grossed-up dividend yield of 9.9%, or 6.9% without the franking credits. Analysts are expecting a very sizeable dividend yield from the ASX bank share.
For income-focused investors, they might get a solid amount of dividends from ANZ. It also looks cheap on the price/earnings (P/E) ratio side of things. Commsec numbers suggest that the ANZ share price is valued at 10x FY24's estimated earnings.
However, the company's earnings per share (EPS) isn't expected to do much over the next couple of years. This is despite much higher interest rates that enable ASX bank shares to earn more on the cash in their transaction accounts.
ANZ's boss said with its FY23 half-year result, the next six months will be "more difficult than the last" with competition in retail banking "as intense as it has ever been, both in Australia and New Zealand".
If the profit isn't growing, the ANZ share price might not rise either. For investors wanting to buy ANZ, it's cheaper than it has been for much of the past two and a half years. But it's not the type of business I'm looking to add to my own portfolio because of the lack of growth potential.
