The Motley Fool

Is Westfield a buy?

After a year of giving consistent returns to shareholders, global shopping centre operator Westfield Group (ASX: WDC) has fallen in value in the last few weeks in a classic case of ‘sell in May and go away’. Currently, the stock is trading at just below $11.40 after hitting a 52-week high of $12.55 just last month, which brings us to the question: Is Westfield now worthy of a position in your portfolio?

Growth potential

Whilst Westfield, and its counterpart Westfield Retail Trust (ASX: WRT) have so far only solidified their presence in Australia, New Zealand, the US and UK, the group has also expressed its intention for further global expansion. Until recently, the company also owned a 50% stake in Brazil’s Almeida Junior Shopping Centre but sold it off due to opposing long-term goals held by its joint venture partner. Furthermore, a $160 million joint venture in Milan was also held by the group.

Although these two ventures didn’t go according to Westfield’s plans, investors should be pleased to see that it is attempting to brand its name in new and expanding regions. Furthermore, despite having exited from its centre in Brazil, the company recognises true potential in the Brazilian market and has all but ruled out taking up future opportunities to re-enter.

With a current market capitalisation of $24.8 billion and operating just over 100 shopping centres, expansion into other markets would likely prove very beneficial to the company and to its shareholders.

Portfolio restructuring

After effects of the GFC left the retail sector of the economy battered and bruised – and Westfield was no exception. From 2007, the company’s shares fell from over $23 to a low of around $7 in 2011. This prompted the corporation to switch its focus towards restructuring its pool of assets. In doing so, Westfield has recognised its underperforming assets and made strategic divestments, whilst also highlighting its most profitable stores to expand and refurbish.

High yield

At today’s price of $11.37 per share, Westfield offers an attractive dividend yield of 4.5%. Although it is not quite as high as the yields offered by companies such as ANZ (ASX: ANZ), Commonwealth Bank (ASX: CBA) or Westpac (ASX: WBC), the company is also not quite as expensive and has room for further expansion.

Foolish takeaway

With enormous potential for growth, a strategic reshuffle of its assets and a high dividend yield, Westfield is a very attractive investment prospect – particularly when its shares are trading at a 9% discount compared to one month ago.

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

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