Since the beginning of September, shares in Australia's favourite blue chip stocks have fallen hard.
At time of writing, Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and Telstra Corporation Ltd (ASX: TLS) are down 9%, 8% and 4%, respectively.
The latest falls mean only Telstra's share price has remained in the black, for the 2014 calendar year.
The sell-off in shares could be the result of a falling Australian dollar (which is down 6% in the last month), low interest rates or simply a reaction to their excessive valuations. Whatever the reason, it doesn't matter, shares are down.
What does matter, is what we decide to do about it. We can choose to sell, continue holding our shares for those juicy fully franked dividends or go on a buying spree whilst shares prices are low. Let's take a quick look at each to see whether they are, or aren't, offering value at today's prices.
Telstra Corporation, a telecommunications behemoth, has performed well over the past three years as interest rates fell and the group increased market share of mobiles and continued to divest non-core businesses. In coming years, the Network Application Services and International divisions will lead the group towards modest earnings growth. However, even at current prices, I think Telstra is best left on the watchlist.
Of the three blue-chips, Westpac shareholders have suffered the most, since its shares have plummeted nearly 10%. Over the past year, I have opined tirelessly about the excessive valuation of the bank because the market had priced the stock as though it could only go one way: up. Despite offering a generous dividend yield and falling heavily, the bank is still expensive given its growth forecasts for the near and medium terms.
Lastly, NAB – our biggest bank by assets – has seen its shares edge 7% lower in the 2014 calendar year. This is likely a result of the group's UK woes and poor profitability in domestic markets, which simply hasn't been up to the standard investors expect from our big banks. Whilst the bank appears to be getting its ship in order and shares are currently changing hands on a fully-franked dividend of 6%, I believe it's still not a "bargain".
Our #1 dividend stock idea- Yours FREE!
All of these stocks would make a great addition to investors' portfolios, at the right price. Unfortunately, I do not believe any of them will make a great buy at today's levels so investors should look elsewhere for great dividend stock ideas.
