The share prices of National Australia Bank Ltd. (ASX: NAB) and Westpac Banking Corp (ASX: WBC) have performed exceptionally well over the past three years. Up 46% and 64%, respectively.
It's fair to say shareholders have had a good run…
If you include dividends paid however the returns blow out to 69% and 89%, respectively. With a large sum of money, that can be truly life changing.
By comparison the S&P/ASX 200 Index (ASX: XJO) (INDEX: ^AXJO) is up 23.6%.
What's more, in the low interest environment, there is a lack of well-priced blue-chips stocks offering up the same kind of fully franked dividend yield that these two banks offer.
However, with such tremendous gains already achieved, investors should now be considering the likelihood of these two banks continuing to outperform the market in the future.
Perhaps now you could consider taking some profits off the table or exiting a position altogether.
Buy, Hold or Sell?
I rate NAB as a 'Hold' (at best) because it could surprise the market with higher cash profits later in the year as a result of falling provisions for bad and doubtful debts. However, I'm not buying it because I believe the risk isn't worth the reward.
If you want to beat the market AND receive a big dividend in the process, Westpac isn't a 'Buy' either because, unless you've held it for many years, its share price is unlikely to sustainably beat the market from here. I believe its shares are very expensive and it lacks any significant growth strategy to help it grow earnings strongly in the next five years.
Want a STANDOUT BUY right now?
