Like many of the Big Four banks Westpac Banking Corp (ASX: WBC) used to be a darling of the market. It provided share price gains on top of a market-beating dividend yield. In fact, in the last 10 years it has returned shareholders an average of 4.9% per annum. While that may not seem incredible at first glance, let’s not forget we have had a global financial crisis during this time.

The question now though is whether it can continue to provide shareholders with this level of return in the next decade. Like its peers National Australia Bank Ltd (ASX: NAB), Commonwealth Bank of Australia (ASX: CBA), and Australia and New Zealand Banking Group (ASX: ANZ), its shares have lost considerable value in the last 12 months.

To date, they are down almost 20% during this time, following a 7% rise from a two-and-a-half-year low of $28.06 a little under two weeks ago.

There have been concerns floating around the market that the banks would have to raise additional capital or follow in the footsteps of BHP Billiton Limited (ASX: BHP) and start cutting their dividends. But I have hopes that the capital ratio has been strengthened enough now through the equity raising, its dividend reinvestment plan, and a reported reduction in bad loans. Its capital ratio currently stands at 10.2%, an increase from 9.5% in September.

If a dividend cut is indeed off the table then the shares are an extremely tempting investment in my opinion. Westpac’s shares have a forward dividend yield of 6.4%, around 200 basis points higher than the market average.

Although I expect earnings growth to slow in the next few years, I feel the company could surprise the market this year. It has recently gone against the Reserve Bank and joined ANZ and NAB by increasing interest rates for its business customers.

Also, it has partnered with supply chain platform provider Octet on the launch of Business Link. Business Link is a platform for small to medium-sized businesses that facilitates credit card payments to overseas suppliers. It also offers the ability to work with their suppliers in order to manage their workflow. I see it as a time-saver and a secure way of making transactions. Although still in its infancy, it is a great platform which could offer a decent revenue stream in the future.

Westpac is heavily involved with Blockchain. Although it admits it doesn’t quite understand at present where it will fit in with the future of the banking business, it is aware that it could one day become very disruptive to the industry. I feel shareholders should take comfort from the fact that the company is heavily involved and part of a consortium which is developing a new Blockchain framework for financial institutions. Should the day come when Blockchain is disruptive, I feel Westpac will be at the forefront and utilising the new technology.

Foolish takeaway

By historical standards, Westpac’s shares are on the cheap side trading at just 11.8 times earnings and make for a good investment in my opinion. Especially when you take into account the market-beating dividend it is paying out. Of course, if the market volatility returns they could be dragged down towards the two-year low they touched recently. But more often than not timing the market can be a fool’s game. So in my humble opinion, when you see cheap shares it can be best not waiting for them to become cheaper.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.