Rethinking Dividends: Why 2026 Could Reward Global Bank Investments
Hey everyone, let’s talk about the Commonwealth Bank of Australia, or CBA, and why some investors are starting to think differently about dividends as we move into 2026. For years, CBA has been a favourite for income-seeking investors. Its share price and total returns were impressive — between 2023 and 2024, it delivered a total return of nearly 68%, almost mirroring the MSCI World Banks Index. On the surface, it looked like a no-brainer. But there’s a catch: focusing solely on CBA exposes investors to single-stock risk, which, as recent market movements have shown, can quickly materialise. Year-to-date in 2025, CBA has only returned about 5.9%, while a diversified investment in global banks would have netted a 32% gain in AUD terms.
So, why look beyond CBA? Simply put, global banks offer more attractive valuations. While CBA still trades at a P/E ratio of 25.7, other Australian banks like NAB, Westpac, and ANZ sit closer to 18–19. Meanwhile, the MSCI World Banks Index is trading at just 12.7, giving investors access to CBA indirectly at only a small fraction of its weighting. Major U.S. banks, including JPMorgan, Wells Fargo, and Bank of America, trade at P/E ratios around 14, and European names like BNP Paribas and Nordea Bank are even cheaper. This indicates potential upside for investors willing to diversify internationally.
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The story isn’t just about valuation. Earnings growth for many global banks is strong. Some U.S. banks reported double-digit growth in recent quarters, collectively generating around $142 billion in profits last year — up roughly 20% from the previous year. Contrast that with Australian banks, where earnings growth has been flat or even negative for some, and it’s clear why global options are becoming appealing. And while dividend yields in the global market are generally lower than what CBA offers, certain global banks are delivering both steady income and dividend growth, which can meet retirees’ income needs while also providing upside potential.
What does this mean for Australian investors, particularly retirees who rely on dividends? Concentrating heavily on domestic banks like CBA carries risks. Market corrections, cost pressures, or regulatory challenges can hit your income stream hard. By diversifying into global banks, investors gain exposure to different sectors, regions, and industries underrepresented in the ASX, including technology and global consumer brands, while also mitigating concentrated risk.
Funds like the Plato Global Shares Income Fund have been designed to tap into this opportunity, offering a diversified portfolio of dividend-paying global equities with yields around 6% per year, outperforming the benchmark and consistently distributing income.
In short, 2026 could be a year when thinking differently about dividends pays off. CBA remains strong, but looking globally may provide better value, stronger earnings momentum, and a more resilient income stream. For investors ready to step beyond the local market, global banks are offering an opportunity that’s hard to ignore.
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