MENU

Why the Westpac Banking Corp (ASX:WBC) share price sank lower today

One of the worst performers on the ASX 200 on Tuesday has been the Westpac Banking Corp (ASX: WBC) share price.

In morning trade the banking giant’s shares are down almost 5.5% to $26.25.

Why are Westpac’s shares sinking lower?

Although the market is a sea of red today and peers such as Australia and New Zealand Banking Group (ASX: ANZ) and Commonwealth Bank of Australia (ASX: CBA) have dropped lower, the majority of Westpac’s decline can be attributed to something else.

This morning the bank’s shares went ex-dividend for its fully franked 94 cents per share final dividend. Eligible shareholders can now look forward to receiving this generous dividend in their nominated accounts on December 20.

Federal Court news.

In addition to this, news that that the Federal Court has refused to approve a $35 million penalty given to Westpac after it admitted to breaking responsible lending laws could be weighing on its shares.

According to the ABC, the settlement that was negotiated between Westpac and the Australian Securities and Investments Commission has been declined and the two parties will have to return to court on November 27 for directions.

This was not completely unexpected, though. Last month the AFR reported that former solicitor general Justin Gleeson, SC, told the Federal Court that the $35 million penalty agreed between the regulator and Westpac was not sufficient.

He suggested that the banking giant should pay at least $100 million if it breached lending laws.

What now?

While a penalty of $100 million isn’t overly material for the banking giant, these penalties soon add up and are likely to have a knock on effect on investor sentiment.

And although I still see Westpac as a good investment option due to the low multiples its shares trade on, it certainly isn’t a low risk on anymore.

Because of this, income investors may be better off with this top dividend share which is growing at a strong rate.

OUR #1 dividend pick to grow your wealth now is revealed for FREE here!

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 has no position in any of the stocks mentioned. 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.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…

Including:

The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!