Westpac Banking Corp (ASX:WBC) shares offer a big dividend yield, but that's not all.
For example, over the past five years, shares in the $106 billion bank have risen 53%.
Westpac Bank (WBC) Versus ANZ Bank (ANZ) Share Price
3 reasons to own Westpac Bank (WBC) shares in 2017
While I think Westpac shares are a little too expensive for new investors to buy today, I think current shareholders can look forward to 2017 for the following reasons:
- Dividend yield. Despite a recent rally in prices, Westpac shares are forecast to pay a fully franked dividend of 6%. Grossed up for franking credits that's a comparable yield of 8.6%.
- Relative safety. Being a $106 billion bank that is integral to our economy, Westpac is heavily scrutinised by teams of analysts and a regulator. This affords it a higher degree of relative safety, in my opinion.
- Market share and cost outs. This is a two-in-one. With a large stake in the mortgage and business banking markets, Westpac should be able to grow profit modestly over time by achieving cost reductions and maintaining market share.
Foolish Takeaway
At today's prices, Westpac shares appear a little expensive. But they offer a big dividend, modest growth potential through cost cutting and the relative safety of owning Australia's second largest bank.
For those seeking to make an entry into the stock, I think a price below $24 per share would be tempting.
