Is today a good day to buy Woolworths Limited?

What: Shareholders in Woolworths Limited (ASX: WOW) must be scratching their heads today in wonderment at why the share price is down 1.2% on a day when the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) is rallying and has touched a brand new six-year high.

The prime reason the sell-off seems odd is because the retail giant actually released an announcement to the market today which would appear to be a positive for the company.

So what: The announcement stated that the group is investigating the possibility of divesting property assets including the freehold assets of its hotel venture ALH Group. One option could include the creation of a separately listed vehicle, similar to what was achieved from the $1 billion listing of property trust Shopping Centres Australia Property Group Ltd (ASX: SCP) and likewise by Wesfarmers Ltd (ASX: WES) with its Bunnings property assets via BWP Trust (ASX: BWP).

Now what: Freeing up property assets from Woolworths’ balance sheet has the potential to create substantial shareholder value; the fall in share price would appear to be at odds with that possibility. Given investors’ enthusiasm for high quality property assets such as ALH’s hotel portfolio, a listing or sale-and-lease-back could be expected to meet with significant demand.

Record profits and a fast growing, fully franked dividend...

Woolworths is now so large that investors shouldn't expect above average growth in earnings or dividends. In contrast, this little known ASX company has already delivered eight consecutive years of profit and dividend growth... but with even more growth ahead, the shares are still a firm "BUY" today! Discover The Motley Fool's #1 dividend pick in our newly updated report. Simply click here for your FREE copy right now.?

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

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.