SHARES: Opportunity Or Trap For Bank Of Queensland (BOQ.AX)?


*BOQ.AX forward economics appear jaded 
*A recent dividend cut. One more to go?
*A new CEO in February. Will it inspire price action?



Bank of Queensland (BOQ.AX) struggling...

For those looking to snap up BOQ.AX, what is arguably one of the hihgest dividend-yielding stocks on the ASX; think again. The forward economics aren't looking great at the moment for Bank of Queensland, one of Australia's oldest retail banks founded in the 1850s. Dividends have recently been cut to 31cps and are likely see another cut over the next year driven by increasing cost pressures and falling revenues.
 

...with fundamentals not looking great

Three rate cuts in the past six months by the RBA have contributed to a squeeze on net interest margins (interest income - interest expense) to 1.92% shown in BOQ's latest financials. BOQ's housing book remains subdued since early 2016 and is sign of poor growth. Earnings per share (EPS) over the prior three years also continues to trend lower. Shareholders welcome new CEO, George Frazis, in February 2020 but any positives to come from his new Group strategy is unlikely to be felt in the near-term.
 

Pivot levels

We expect bearish pressure on BOQ.AX over the next 12 months given the lacking fundamentals and near-term catalysts, though, recognise that a high dividend yield still exists relative to the market despite its potential to be cut. Even in the case of a cut, BOQ.AX could still generate an annual dividend yield of 5-6%.

Current share price (Oct 22): A$9.16
Potential downside pivot levels: A$8.88 (intra-year), A$8.00 (multi-year low) A$6.00 (decade low).
Potential upside pivot levels: A$10.00 (intra-year), A$10.80, A$11.60.
 

Upcoming ex-dividends on the ASX 200


2019_10_21-Dividend-Graph.PNG
Source: Eikon

*Shares must be held 1 day prior to the Ex-Dividend date in order to be eligible for dividends
**Annualised gross dividend unadjusted for corporate actions
***Ratio of the dividends in the most recently reported 12-month period on the prior day's close price.
****Dividend per share growth between last FY and dividends paid in the previous five FYs. 
*****Declared dividends are paid to the eligible owners
 



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