With the Westpac Banking Corp (ASX: WBC) share price trading just a fraction off its 52-week high, its shares are now changing hands at approximately 15.5x trailing earnings.
Considering the shares of Australia's oldest bank have traded at an average of 13x earnings during the last decade, I believe this puts them well and truly in the overvalued bracket right now.
Unfortunately I suspect this means that there is a real chance its shares could take a reasonably sharp tumble over the next 12 months.
Because of this I would suggest investors avoid buying its shares today and focus on other dividend shares instead. Listed below are two that I like right now:
G8 Education Ltd (ASX: GEM)
I believe this leading childcare operator would be a good option today as it provides investors with a trailing fully franked 6.4% dividend and solid long-term earnings growth prospects. G8 Education currently operates 510 childcare centres with a total of 38,713 licenced places. Despite this, management believes there is still plenty of room for growth both at home and overseas. In fact, the company recently placed $212.8 million worth of shares with China First Capital at a premium in order to fund future growth opportunities. I suspect this could include an expansion into the lucrative China market.
Premier Investments Limited (ASX: PMV)
Although this retailer's shares only provide a trailing fully franked 3.6% dividend, I believe there is significant room for it to grow in the future thanks largely to the ongoing and highly successful international expansion of its Smiggle brand. In its recent half-year results the company reported a 10.6% increase in earnings before interest and tax to $93 million. Smiggle was the key driver of the strong result, with the brand's global sales increasing 26.4% during the period. This means the brand now accounts for 23% of total company sales. I expect more of the same in the second-half.
