Westpac Banking Corp goes ex-dividend – down 3%

Westpac Banking Corp (ASX: WBC) has dropped 97c or 2.8% this morning, with its shares now trading ex-dividend.

Given the low level of bad debts and increased lending activity, the banking major managed to increase its interim dividend by 4c, or 5%, to 90 cents per share, on the back of a record first-half cash profit of $3.77 billion. However, investors were left disappointed, as the bank failed to announce its third successive special dividend in its half-year results.

Following this morning’s drop, the shares are now trading at $34.17, which is 5.1% below the record high it set, just two weeks ago. The bank is now trading on a P/E ratio of 14.9 and offers a 5.1% fully franked dividend yield.

National Australia Bank Ltd (ASX: NAB) has also fallen 2.6% in early trade, while Australia and New Zealand Banking Group (ASX: ANZ) and Commonwealth Bank of Australia (ASX: CBA), are both up 0.3% and 0.5% respectively.

A more solid bet than Westpac

Although the banks still offer a decent dividend yield, there is limited upside potential in their share prices, given their rally in recent years.

Another company which also offers a bumper dividend yield and still has plenty of growth ahead of it has recently been identified by The Motley Fool's top analysts. Discover The Motley Fool's favourite income idea for 2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of "The Motley Fool's Top Dividend Stock for 2014."

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

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