ANZ Group Holdings Ltd (ASX: ANZ) shares have been having a tough time in recent months.
Since trading around $26.00 back in February, the banking giant's shares have dropped approximately 10%.
While this is disappointing for shareholders, it could be good news for the rest of us. Especially if you're an income investor.
That's because ANZ shares currently trade with a trailing fully franked 6.6% dividend yield.
But how safe is this dividend yield? Could it be a dividend trap?
Are ANZ shares really going to offer a 6.6% yield?
One leading broker doesn't believe that ANZ shares are a dividend trap. Far from it!
The team at Goldman Sachs actually expect the bank's shares to offer an even bigger dividend yield in the coming years.
For example, the broker is forecasting fully franked dividends of $1.62 per share in FY 2023, FY 2024, and FY 2025. Based on the current ANZ share price of $23.28, this will mean yields of approximately 7% for the next three years.
Though, it is worth highlighting that this dividend yield is a forecast. And as we see quite often with forecasts, they can sometimes be wide of the mark. Just ask the Reserve Bank!
But Goldman appears quite confident with its forecasts. This is because it expects the bank's institutional business to support its earnings in this tough operating environment. It explains:
Institutional is ANZ's largest division, representing 44%/33% of Group RWAs/revenues, and the division's 1H23 PPOP RoRWA increased to 2.2%, from a 2H16 trough of 1.2%. Our assessment of the profitability of this division concludes that these return improvements are largely sustainable.
Goldman also sees plenty of upside for ANZ shares from current levels. It has a conviction buy rating and a $27.38 price target on them. This implies a potential upside of 17.5% for investors over the next 12 months.
