Andhra Bank Ltd (NSE: ANDHRABANK, BSE: ANDHRABANK)
Today’s stock pick is Andhra Bank Ltd, of the oldest banks in India, founded in the year 1923. Andhra Bank’s annual income for the fiscal year 2010-11 was over Rs.9,100 crores. This is a large cap stock, a stalwart that will always be in business and that is unlikely to go bankrupt. Andhra Bank is a stock that has performed very well over the last five years.
Andhra Bank Ltd has been profitable for several years and continues to show solid earnings growth over the last three years. During the fiscal year 2010, Andhra Bank had earnings growth of over 60% and over 20% for the year 2011. For a bank with earnings of over Rs.1,000 crores, these are significant growth figures.
Andhra Bank also has a solid dividend history, as it has been issuing dividends for over 10 years. This is a banking stock with a very good dividend yield, which is at 7.71% for a current stock price of Rs.123.45. Such a dividend yield is very attractive, and very few stocks in today’s market conditions offer such good dividend yields.
Andhra Bank is definitely a stock for the future. Investors should consider buying this stock at a price below Rs.125 and hold for at least five years. This is a long-term stock and the sweet spot to look for is its dividend growth.
Overall, a company with consistent growth, a low PE ratio, and high dividend yields is definitely a good buy.