MENU

Should you buy Westpac Banking Corp (ASX:WBC) shares?

Credit: Kiwiteen123

Despite rallying 2% higher on Friday, the Westpac Banking Corp (ASX: WBC) share price is still down over 11% since the turn of the year.

Like all of Australia’s leading banks, Westpac’s shares have come under significant selling pressure this year largely because of the negative impact of the Royal Commission and concerns over the slowdown in the housing market.

While these are certainly reasons to be concerned, I think the selloff has been a bit of an overreaction.

Is it time to buy Westpac shares?

This decline has left its shares trading at a little over 11x estimated full-year earnings and 1.5x book value. It also means that they offer investors a trailing fully franked 6.7% dividend now.

So with its shares trading at a discount to its historical averages and providing a very generous dividend yield, I think Australia’s oldest bank is great value and a top option for investors that don’t already have meaningful exposure to the banks.

It appears I’m not the only one that thinks this way, either.

According to a change of director’s interest notice filed today, director Peter Nash has dipped into the market this week to top up his shareholding.

The release reveals that Mr Nash bought 2,876 shares through an on-market trade on Thursday at an average price of $27.52 per share. This $79,000 investment increases his holding by 56% to a total of 8,020 ordinary shares. He also holds 1,032 capital notes.

I think this insider buying is a big confidence boost. As I mentioned earlier, I see insider buying as a bullish indicator because very few people should know a company, its prospects, and intrinsic value better than its own directors.

As a result, this cements my belief that Westpac is the best option in the sector ahead of National Australia Bank Ltd (ASX: NAB) and Commonwealth Bank of Australia (ASX: CBA).

OUR #1 non-bank dividend pick to buy in June is revealed for FREE here!

Financial year 2018 is here and The Motley Fool’s dividend detective Andrew Page has revealed his must buy dividend share to grow your wealth in 2018.

You might not know this market leader's name, but it's rapidly expanding into a highly profitable niche market here in Australia. Even better, the shares boast a strong, fully franked dividend that should balloon in the years to come. In other words, we're looking at the holy grail of incredible long-term growth potential AND income you can watch accruing in your account in real time!

Simply click here to grab your FREE copy of this up-to-the-minute research report on our #1 dividend share recommendation now.

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of National Australia Bank 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 Scott Phillips.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.