Unlike most ASX 200 shares, ASX bank stock Westpac Banking Corp (ASX: WBC) didn't report its earnings last month. Thanks to a wonky financial calendar, Westpac shareholders will need to wait until 4 November to get a peek at this bank's latest numbers.
But perhaps this delay has played in Westpac shares' advantage. This ASX 200 bank has rocketed in value in recent months, with the Westpac share price up 21.85% since the start of June, and up a whopping 37.1% in 2024 to date.
Investors have also enjoyed a stonking 47% rise over the past 12 months.
Check that out for yourself below:
Whilst this rise may delight long-term Westpac shareholders, it might cause others who might be interested in buying this ASX bank to pause.
With this paradigm in mind, let's discuss two reasons you might want to buy Westpac shares today and one reason you might want to wait.
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Reason to buy Westpac shares
First, Westpac is one of the largest, most mature, and profitable businesses on our markets. This stock is actually the oldest company in the country, with its origins as the Bank of New South Wales stretching back to 1817.
I think this means investors can buy Westpac with the comfort of knowing it is highly unlikely it will ever run into major financial strife or be at risk of bankruptcy. I would happily bet that Westpac will still be around in 100 years' time.
This is important for many investors, particularly those who might not have a primary source of income. Westpac has a rusted-on customer base, a firmly established market share of the Australian banking sector, and benefits from government policy that protects the Australian financial sector. These factors, in my view, benefit shareholders.
Another reason to buy this ASX 200 bank stock
Of course, we can't talk about a major bank stock like Westpac without discussing dividend income. ASX bank shares are well-known for their fat (and usually fully franked) dividends. Westpac is no different. This company has a long history of paying out generous dividends, which have also tended to rise over time.
Despite the eye-watering share price gains we've seen with Westpac, this stock still offers a hefty dividend yield today. At current pricing, Westpac shares are trading on a dividend yield of 4.64%. If we factor in Westpac's usual full franking credits, that yield would gross up to 6.63%.
If you invest primarily for dividends, I think Westpac is still a great stock to hold in a diversified income portfolio.
One reason to wait
The one reason I see to wait if you're interested in buying Westpac shares today is its share price. It's not exactly normal for Westpac to rocket by the amount that it has over the past 12 months. Indeed, if you zoom out on the share price graph above, you'll see that Westpac shares have a tendency to tread water for years at a time.
Westpac's current price-to-earnings (P/E) ratio of 17.66 is well above this bank's long-term average. I think there's a reasonable chance that investors will get a better share price to buy in over the next few years. Bank earnings aren't growing right now, as we saw with Commonwealth Bank of Australia (ASX: CBA)'s report last month. In fact, they haven't grown substantially for a while now.
If this continues, I can't see Westpac shares continuing to rise, and I wouldn't be surprised to see a pullback. So, if you aren't desperate for that dividend income, it might be worth waiting until Westpac shares come back to earth. Which I think, although I could be wrong, that they will.
