Following the release of its half-year results last month, Westpac Banking Corp (ASX: WBC) shares have nosedived.
In fact, over the past two months alone Westpac shares have dropped a massive 21%.
In recent years as interest rates fell, Westpac, along with big bank rivals Commonwealth Bank of Australia (ASX: CBA) and Australia and New Zealand Banking Group (ASX: ANZ), saw its share price rally as investors' insatiable desire for big dividend stocks went full steam ahead.
Despite their alluring dividend yields shares in all three banks have been significantly overpriced for some time. Therefore, the latest share price falls should come as no surprise to prudent value investors.
However, if concerns over the local economy continue to grow and more of the banks are forced to raise capital from shareholders, the selloff in bank stocks may continue.
That's why I'm not buying any of the big banks at this time.
There are, however, another two dividend stocks I am buying in the current market.
- Coca-Cola Amatil Ltd (ASX: CCL) is Australia's distributor of Coca-Cola and Beam-branded products. It also has the right to distribute Coca-Cola products to five neighbouring countries, including New Zealand and Indonesia. Whilst risks persist in Coca-Cola Amatil's turnaround strategy, a cash injection from its parent, The Coca-Cola Company, and an increased marketing spend bode well for future returns. Indeed, at less than $10 per share the risk-reward trade-off for Coca-Cola Amatil shares now appears worthwhile. It's offering a 4.3% partially franked dividend.
- Computershare Limited (ASX: CPU) is a leading share registry services business, connecting shareholders to their companies in over 20 countries. Whilst Computershare shares are forecast to pay a grossed-up dividend yield equivalent to just 3.24% in the next year, it's a direct beneficiary of higher U.S. interest rates which are in my opinion likely to rise quicker than many people expect. This could provide the impetus for management to further increase its payout over time.
Should you buy Computershare and Coca-Cola Amatil today?
