Westpac Banking Corp (ASX: WBC) shares have just capped off a very successful 2023 financial year. The last financial year ended on 30 June 2023. Westpac was going for just $19.50 a share when FY2023 began. But last Friday, this ASX 200 bank stock closed up shop at $21.34 a share.
That might not seem like a massive difference. But it represents a share price gain of 9.44% for FY2023, as you can see below:
Adding to that has been Westpac's hefty dividends, which come fully franked of course.
Over the past 12 months, Westpac has forked out two dividend payments to shareholders, following the bank's typical pattern. There was the 64 cents per share final dividend that shareholders received back in December. As well as the interim dividend of 70 cents per share that was mailed out just last week.
Both payments were significant increases over their corresponding dividends from FY2022.
They represent a rather large 6.87% yield for an investor who picked up Westpac shares back at the start of FY2023, taking the total shareholder return to 16.31%. And that's not including the benefits of Westpac's full franking credits either, which would push FY2023's returns close to 20%.
So now that we've established Westpac's stellar return last financial year, what might FY2024 hold in store for Westpac shares?
Will FY24 top Westpac's 9% return for FY23?
Well, sadly for shareholders, ASX brokers are divided on what the now-current financial year will bring for the Westpac share price.
ASX broker Goldman Sachs has recently removed Westpac shares from its conviction buy list in favour of rival ASX bank share ANZ Group Holdings Ltd (ASX: ANZ). Goldman cuts its rating on Westpac from buy to hold. It now has a 12-month share price target of $23.39 for the bank. if realised, that would see the Westpac share price tread water over the coming year.
This broker reckons rising costs and inflation will eat into Westpac's profitability going forward. Here's some of what it said:
…ongoing IT and staff cost pressures, coupled with incremental productivity benefits likely getting harder as WBC gets further into its reset program, sees us now expecting some cost growth in FY24E… WBC's relative skew towards consumer lending leaves it more exposed to the macro environment that we foresee…
Saying that, fellow ASX broker Morgans is a little more bullish. It still rates Westpac shares as an add, with a share price target of $24.22. Morgans is eyeing off Westpac's potential for return on equity (RoE) improvement and reckons the shares are very attractive from an income standpoint.
So plenty for Westpac shareholders to consider as we start FY2024.
