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ANZ Group Holdings Ltd (ASX: ANZ) shares could be set to deliver robust returns in the coming year, potentially outperforming the broader market, according to analysts at UBS. With a combination of capital growth and dividend yield, ANZ shares may offer investors an attractive investment proposition. Over the past 12 months, ANZ shares have demonstrated strong performance, surging by 26%, outpacing the modest 9% increase seen in the S&P/ASX 200 Index (ASX:XJO) during the same period. UBS suggests that this trend may continue, presenting an opportunity for further gains.
While UBS maintains a neutral rating on ANZ shares, its price target indicates potential upside. The brokerage firm forecasts a target price of AU$30 for ANZ shares, representing a 4.2% increase from current levels. This projection is based on expectations of earnings per share (EPS) growth and the impact of a recently announced AU$2 billion share buyback, which would reduce the number of shares in circulation.
Despite challenges such as heightened competition, rising areas, and weakening net interest margins (NIMs) in the banking sector, UBS remains optimistic about ANZ's dividend potential. The brokerage estimates a dividend yield (excluding franking credits) of 5.9% at the current share price. While dividends are not guaranteed, UBS believes ANZ has the capacity to generate sufficient profit to sustain attractive dividend payouts.
Considering both potential share price appreciation and dividend yield, UBS projects a total shareholder return of just over 10% for ANZ shares in FY25. This anticipated TSR could exceed the average returns of the broader market, as tracked by the Vanguard Australian Shares Index ETF (ASX:VAS), which historically delivered around 8% per annum over the past five years.
While other ASX-listed shares may offer higher returns over the short term, UBS views ANZ shares as an attractive investment option with the potential for solid returns by the end of FY25.
