Why I think investors should buy and hold CBA shares for 10 years

Commonwealth Bank of Australia (ASX: CBA) is one of the most widely owned shares on the ASX.

It is also one of the most debated. The valuation often looks full, and that can make it easy to look elsewhere.

Even so, when I think about a 10-year investment horizon, I see CBA as a bank share I would be comfortable owning and holding.

A consistent earnings machine

One of the key reasons is consistency.

CBA continues to deliver strong earnings, supported by lending growth and a large deposit base. In its latest half, cash profit growth remained solid, reflecting steady performance across its core banking operations.

What stands out to me is how repeatable this is.

The bank generates income from mortgages, business lending, and deposits. These are products that remain in demand across different economic cycles. That gives CBA a reliable earnings base that can support long-term returns.

Industry-leading profitability

Another factor that I think is important is profitability.

CBA continues to deliver a return on equity of around 13.8%, which remains among the highest in the Australian banking sector.

I think that level of return highlights the quality of the business.

It reflects pricing power, scale, and efficiency. When a company can consistently generate strong returns on equity, it tends to compound shareholder value over time.

For long-term investors, that is a powerful driver of returns.

A strong balance sheet supports stability

CBA’s balance sheet is one of its biggest strengths, in my opinion.

The company reported a Common Equity Tier 1 ratio of 12.3%, which sits comfortably above regulatory requirements.

Funding is also supported by a large base of customer deposits, which account for around 79% of total funding.

This is important because it gives CBA flexibility. It can continue lending, invest in technology, and support customers even when conditions become more challenging. Over a 10-year period, that kind of stability becomes increasingly important.

Ongoing investment in technology

CBA is also continuing to invest heavily in its platform.

Spending on technology remains a key focus, with over $1.2 billion invested during the first half to modernise systems and improve customer experience.

This includes areas like digital banking, fraud prevention, and AI capabilities.

To me, that suggests a business focused on staying competitive.

Banks are becoming more technology-driven, and CBA’s willingness to invest should help it maintain its competitive position over time.

A reliable and growing dividend stream

Income is another part of the story.

CBA declared an interim dividend of $2.35 per share, fully franked, continuing its track record of returning capital to shareholders.

For investors building long-term wealth, those dividends can play an important role.

Reinvested over time, they can significantly contribute to total returns through compounding.

Foolish takeaway

CBA combines consistent earnings, strong profitability, and a resilient balance sheet.

It also continues to invest in technology and return capital to shareholders.

When I look at those qualities together, I see a business that is built to perform over time. That is why I think investors could buy and hold CBA shares with confidence for the next decade.

The post Why I think investors should buy and hold CBA shares for 10 years appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has positions in Commonwealth Bank Of Australia. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.