Bank shares 'are good long-term investments'

Shares in Australia's major banks offer strong long-term returns that can offset the borrowing pain caused by rising interest rates, it has been suggested.

Wealth For Life Financial Planning principal Rex Whitford noted that bank shares provide a healthy income boost thanks to their tax-friendly nature.

Speaking to News Limited, he said: "The great thing about the dividend yield from the banks is that almost without exception they are 100 per cent franked [giving investors a 30 per cent tax credit on their dividend income].

"This provides considerable uplift in total yield, especially in a tax-free structure such as an allocated pension."

The comments came as Anthony Keane of News Limited suggested that a growing number of investors are buying up shares in Australia's increasingly profitable banks.

Aussies searching for good investment options could also choose to compare term deposits in search of the best returns. Mr Keane noted that, according to research by Morningstar, ANZ's annual dividends per share will rise from $1.26 today to $1.46 by 2012, Westpac's will increase from $1.39 to $1.56, the Commonwealth Bank from $2.90 to $3.40, and NAB from $1.52 to $1.79.

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