Should you sell your Westpac Banking Corp shares?

Since dropping as low as $29.40 in the middle of last year, the Westpac Banking Corp (ASX: WBC) share price has risen by a solid 7% to find itself up at $31.46 today.

This isn’t a bad return if you bought in at that point, especially if you add in the fully franked dividends it has paid out since then.

Should you take profit now?

In my opinion Westpac’s shares are currently trading in an awkward space to make a recommendation.

They’re not expensive enough for me to recommend selling them, nor are they cheap enough for me to recommend investors buy them. They are ultimately a “hold” as far as I’m concerned.

But the aforementioned dividend certainly makes holding them that little more attractive. At the current share price Westpac’s shares provide investors with a trailing fully franked 6% dividend.

This is far better than the dividends on offer with Commonwealth Bank of Australia (ASX: CBA) and Australia and New Zealand Banking Group (ASX: ANZ) shares.

These two banking rivals currently provide trailing fully franked 5.3% and 5.5% dividends, respectively.

But wiill it cut its dividend this year?

As we saw with Telstra Corporation Ltd (ASX: TLS) last year, anything is possible when it comes to dividend cuts.

However, even with the bank levy and a dip in house prices, I remain confident that thanks to out of cycle rate hikes, the banking giant is capable of maintaining its dividend without putting its balance sheet under too much stress.

Overall, this gives me the confidence to not sell and instead continue holding onto my shares for the foreseeable future. I admittedly don’t have high expectations for them, but with a generous 6% yield on offer, Westpac’s total return should at least match the market’s performance in 2018 in my opinion.

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Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of and has recommended Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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