One way to maximise your investment in the ASX Big Banks (and double your yield)

Most retail investors are in the Big Four banks (and Macquarie Group to a lesser extent) for one main reason - those hefty fully franked dividends. Commonwealth Bank, the nation's largest. has paid out a $2+ fully franked dividend every half year for the last four reports. Meanwhile, the National Australia Bank has not recorded a decline in its half-yearly payouts since mid-2020 when COVID first hit. And although Macquarie Group's dividend is not fully franked, the forthcoming $3.85 per share payout is nothing to sneeze at.

It's for this very reason that sell-side equity analysts have been left so stumped. CBA, for instance, is one of the most expensive banks by valuation in the developed world. Every sell-side analyst who covers it (bar one), according to FNArena, has it either at a SELL or equivalent rating. Yet, its share price has not declined dramatically.

But while dividends are fantastic, it is also true that dividends can and do fluctuate. Or, as many investors have learned the hard way, can be eliminated altogether.

That's where bank bills can be differentiated. Not only are bank bills guaranteed just like any other bond, and can appreciate like a stock, but they can also pay twice the trailing yield of any major bank. It's become such an investment opportunity that income managers like Perpetual's Michael Korber are running into them head-first. He tells us more about the opportunity in bank bills - and floating rate credit more generally in this edition of The Pitch.