4 reasons you should buy Westfield Group

If you’re looking for income and growth, don’t look past the global shopping-centre giant.

| More on:
a woman

You鈥檙e reading a free article with opinions that may differ from The Motley Fool鈥檚 Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The proposed separation of the Westfield Group鈥檚 (ASX: WDC) international assets from those of Westfield Retail Trust (ASX: WRT) appears set to go ahead with the former being primed as the growth business with global opportunities. The Australian shopping-centre market is heavily saturated, especially when compared to the rest of the world, and this reality may be behind the decision to separate the assets on geographical lines.

A revised proposal reallocating net debt between the two new proposed entities, Scentre Group and Westfield Corporation, is expected to get shareholder approval on May 29 and formalise the below investment case for the Westfield Group.

1) It offers value relative to its potential. Selling for $11.07 it trades on 15.7 times forecast earnings per security of 70.5 cents per share for the 2014 financial year. Some analysts expect it to beat those forecasts making it potentially cheaper. In a market where many large-cap stocks look overvalued, Westfield remains a standout given the growth potential.

2) Dividends. Westfield Group is forecasting a distribution of 52.5 cents per security this financial year meaning it trades on a partly franked 4.75% yield.

3) It’s lifting sales.聽Last week the Group announced that in Australia comparable specialty retail sales were up 4.4% for the March quarter, with the chief executive stating there has been an improving trend in the retail sales environment since the third quarter of last year. Specialty retail sales also grew in the United States and United Kingdom, two large economies returning to decent growth levels.

4) It鈥檚 positioned for the future. The Group has a development pipeline to power long-term returns, including flagship project Westfield World Trade Centre in New York. The strategy to become the world leader in retail destinations appears achievable with the futuristic integration of food, fashion, leisure and entertainment a likely winner worldwide.

Westfield鈥檚 share price suffered from weak sentiment as some thought the online headwinds would be too strong in damaging the value of Westfield鈥檚 bricks-and-mortar offerings to its tenants. The positive sales figures suggest otherwise and Westfield remains a business with a bright future at reasonable valuations.

Motley Fool contributor Tom Richardson owns shares in Westfield Group. You can give聽feedback on Twitter聽@tommyr345

More on 鈴革笍 Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more

woman holds sign saying 'we need change' at climate change protest

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
鈴革笍 Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
鈴革笍 Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more

asx share price competitions represented by businessmen arm wrestling
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more

asx investor daydreaming about US shares
鈴革笍 How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more

person reading news on mobile phone
鈴革笍 Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more