On Tuesday the Westpac Banking Corp (ASX: WBC) share price tumbled almost 1% lower to $28.43.
This means that Australia's oldest bank has now seen its share price fall over 15% since peaking at $33.68 in October.
Should you pick up shares today?
I think that buying Westpac under $30.00 is great value. Not only does this mean its shares are trading well below historic earnings and book value multiples, they offer one of the more generous dividend yields on the market.
Based on the last close price, Westpac's shares now provide investors with a trailing fully franked 6.6% dividend.
This is significantly higher than the market average of 4% and even many of its banking peers. At present rivals Commonwealth Bank of Australia (ASX: CBA) and Australia and New Zealand Banking Group (ASX: ANZ) offer trailing fully franked 6.1% and 5.7% dividends, respectively.
What are the risks?
But an investment in Westpac is certainly not without risk.
The Royal Commission is likely to weigh heavily on the banks for some time to come. As could any penalties that are imposed by regulators as a result of the Commission. This could make their shares more volatile than normal.
In addition to this, the Australian housing market appears to be cooling and could lead to lower demand for home and investment property loans.
What now?
The good news is that I think that the shares of Westpac and the rest of the big four have priced all the doom and gloom in now.
As such, I think the risk/reward on offer from the banks is compelling enough to justify an investment. Though, I would only recommend doing so if you didn't have meaningful exposure to the banks already.
Investors that already have meaningful exposure to the banks might want to consider checking out some of the top dividend shares available in the retail sector instead.
