It's a great day to buy Australian shares…
Interest rates are down, the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is on the rebound, and big dividend yields over 5% from reputable blue chips are easily obtainable.
However, if you are seeking to invest your hard earned cash in the market, make sure you do it right. Pay a good price for the shares and stick with them.
Here are three popular ASX blue-chip stocks which I think are not in the buy zone right now…
Westpac Banking Corp (ASX: WBC) – dividend yield: 5.5% fully franked
Westpac, Australia's second-largest bank by market capitalisation, has rebounded nicely in the wake of a Greek debt default. However, despite falling some 16% since the beginning of April, Westpac shares are not yet in the buy zone. Westpac is facing a number of headwinds in a lower global growth environment, yet its shares are richly priced. Personally, I'd rate Westpac as a hold at best.
Australia and New Zealand Banking Group (ASX: ANZ) – dividend yield: 5.4% fully franked
ANZ is the dark horse among the big banks. Its Australian, New Zealand and Asian exposure is arguably best in class among the big banks. Indeed, whilst the crown for the best big bank – historically at least – goes to Commonwealth Bank of Australia (ASX: CBA), ANZ's diversification and long-term exposure to Asia is pleasing. Despite the growth potential, however, ANZ shares are currently trading above my theoretical, or intrinsic, value estimates. I think it's a hold.
Wesfarmers Ltd (ASX: WES) – dividend yield: 4.9% fully franked
I recently opined that Wesfarmers was expensive. Indeed, the owner of Bunnings, Coles, Kmart and more, appears quite richly priced around $40 per share. I'm of the opinion that the fallout of its number one rival, Woolworths Limited (ASX: WOW), and increased competition from foreign supermarkets will continue to put pressure on margins within the Coles business. Wesfarmers is more diversified than Woolworths. It also boasts a very successful Kmart, Officeworks and Home Improvement business. The same can't be said about Woolworths – yet. Even still, investors buying today would pay a high price for a company which, in my opinion, has its back up against the wall.
A better dividend stock than Wesfarmers, ANZ and Westpac…
