Its almost as if the dividend yield doesn't matter to investors. There is something really unique going on here. Are fund managers and Super Funds buying up the stock as they are terrified of being caught out even further by being underweight CBA? The rally would have caught out fund managers underweight on CBA, perhaps they then admitted defeat and chased their tail and bought CBA just to neutralize CBA's movement against their funds' performance. Now no fund manager wants to liquidate their CBA position and if it rallies again then they again fall against the benchmark. Have to buy but scared to sell.
Who knows. However the enthusiasm for a 3% dividend yield when the 2 year bond yield is 4.2% is pretty incredible. CBA would need to lift its DPS 40% to match the current yield on what is considered the risk-free rate. I was reading the Fin Review and some columnist cited CBA valuation as a bond proxy. I thought to myself, if that's true, why did CBA crash during COVID whilst government bond prices went up? Thats because, CBA is not a bond proxy. Its just another asinine argument to defend the extreme valuation.
No one is buying for the fundamentals and value. This stock is being traded and bought for other reasons.
CBA Price at posting:
$154.06 Sentiment: Sell Disclosure: Not Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)