MENU

Is the Westpac share price in the buy zone?

The Westpac Banking Corp (ASX: WBC) share price has come under pressure today and dropped lower with the rest of the market.

In afternoon trade the banking giant’s shares are down 1% to $26.56.

Should you buy the dip?

Whilst Westpac isn’t my first pick in the banking sector right now, I still think it could be a good option for investors that have limited exposure to the sector.

After all, although its shares have rallied over 11% higher since Christmas Eve, they are still down almost 13% from their 52-week high and trading on relatively low multiples.

In addition to this, one leading broker believes that Westpac’s shares are a buy and has tipped them to rally beyond their 52-week high this year.

According to a note out of Morgans from last month, the broker has an add rating and lofty $33.00 price target on the bank’s shares.

This price target implies potential upside of 24% for its shares over the next 12 months excluding dividends. If you factor in the $1.88 per share dividend that the broker expects the bank to pay in FY 2019, this potential return stretches to a massive 31%.

Why is Morgans bullish on Westpac?

Morgans released the note in response to Westpac’s first quarter update last month which revealed unaudited quarterly statutory net profit of $1.95 billion and unaudited cash earnings of $2.04 billion.

Although this first quarter result fell short of the broker’s expectations, it remains positive on its prospects due to the bank’s stable asset quality and positive capital position. Westpac is the broker’s preferred pick in the sector.

What now?

Whilst I think that Morgans makes some great points, I have a preference for Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB) right now due to their overweight exposure to commercial lending. I expect this to help offset weakness in the housing market and position them for growth this year.

But if you're not keen on the banks then check out these dividend shares that have also been rated as buys.

JUST RELEASED: Our Top 3 Dividend Bets for 2019

NEW! The Motley Fool’s team of crack analysts has just released a timely report revealing the names and codes of their top 3 dividend share recommendations for 2019. Be among the first investors to get access—FREE, for a strictly limited time. You’ll discover the names of 3 hefty dividend paying companies with what our analysts consider to be solid growth prospects for the year ahead…

The first two currently offer fat, fully franked yields and the third is a surprising REIT offering you the chance to become a landlord with none of the hassle! If you’re looking for hot new ideas, look no further. But you do need to hurry. Snap up your free copy now, before supplies run out!

Simply click here to grab your FREE copy of this up-to-the-minute research report on our top 3 dividend share recommendations right away.

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.

5 ASX Stocks for Building Wealth After 50

I just read that Warren Buffett, the world’s best investor, made over 99% of his massive fortune after his 50th birthday.

It just goes to show you… it’s never too late to start securing your financial future.

And Motley Fool Chief Investment Advisor Scott Phillips just released a brand-new report that reveals five of our favourite ASX stocks for building wealth after 50.

– Each company boasts strong growth prospects over the next 3 to 5 years…

– Most importantly each pays a generous dividend, fully franked.

Simply click here to find out how you can claim your FREE copy of “5 ASX Stocks for Building Wealth After 50.”

See the stocks now