The Westpac Banking Corp (ASX: WBC) has been a strong ASX banking stock in 2019.
Westpac shares have climbed 18.06% higher since the start of the year, despite question marks surrounding the sector.
So, with a 6.51% dividend yield on offer, could Westpac shares be the best ASX banking stock on the market next year?
Why Westpac shares have climbed higher in 2019
The Westpac share price has consistently posted moderate gains throughout the year despite a few setbacks.
A weaker than expected Royal Commission final report boosted shareholders’ hopes higher back in February.
The Aussie bank is set to report its full-year results on 4 November and investors will be watching closely.
Fellow ASX banking giant Commonwealth Bank of Australia Ltd (ASX: CBA) reported lower than expected earnings back in August.
Westpac and the other members of the ‘Big Four’ should provide a health check for the Aussie banking sector in the next two weeks.
Westpac will be under extra scrutiny, given it has experienced a falling net interest margin (NIM) in recent periods.
Is Westpac the best ASX banking stock?
While the Westpac share price hasn’t surged higher in 2019, there are still good signs for shareholders.
Westpac shares have a gross yield of 9.5% and a net yield of 6.5% per annum, which is very tidy for an ASX banking stock.
With interest rates at just 0.75% per annum, Westpac shares could be the answer to earning income in the current environment.
Fellow Big Four member National Australia Bank Ltd (ASX: NAB) has a similar yield, but recently cut its dividend.
I like that Westpac held on to its wealth management business while its rivals all exited amidst the Royal Commission scrutiny.
I think Westpac could be a good value buy, given it trades at 12.6x earnings with a solid dividend yield.
There are a number of positives to buying Westpac shares, but it’s not all good news.
Westpac announced a $341 million hit to cash earnings yesterday ahead of its results, due to more customer remediation.
There are still significant risks around investing in the ASX banking sector but, in my opinion, Westpac could land in the buy zone in 2020.
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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. 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.