Westpac Banking Corp (ASX: WBC) shares peaked at an all-time high of $42.95 in mid February, and they've fluctuated ever since.
Solid profits, dividend appeal, and cost-cutting efforts have helped push the share price higher at times. But Westpac has also suffered headwinds from ongoing global uncertainty, interest rate hikes, and inflation concerns.
After the peak, Westpac shares tumbled 9%, they then reversed and gained over 8% in the first 10 days of April. Since then, it looks like investor sentiment has turned again and the ASX bank stock has shed nearly all gains to the time of writing.
Despite broad share market uncertainty, and a rollercoaster share price, I still think there are compelling reasons for investors to add Westpac shares to their portfolio.
Here are three of them.
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1. It's a defensive ASX stock
Westpac, like many other ASX bank stocks, is considered a defensive stock because it can remain relatively stable, even when the economy slows down. The bank provides a broad range of consumer, business, and institutional banking and wealth management services like mortgages, loans, and savings accounts. Australians need these services on a daily basis regardless of what state the economy is in. What's more, investors often rotate into defensive assets in volatile markets, which means Westpac is able to actually benefit from instability elsewhere in the index.
2. Solid earnings and good growth momentum
Because Westpac is a defensive asset which is able to create consistent revenue and predictable earnings, even in a downturn.Westpac posted its first-quarter results in February. The bank reported a 5% increase in unaudited statutory net profit and a 6% increase in net profit excluding notable items. Westpac CEO Anthony Miller said, "We are optimistic on the outlook for the economy and expect demand for both business and household credit to remain resilient." The bank posed an update saying that geopolitical uncertainty and higher market volatility has begun to flow through to the bank's earnings. Westpac said it expects a $75 million reduction to its NPAT in the first half of FY26. But, beyond that one-off cost, the bank confirmed that its underlying business update looks relatively steady.
3. Westpac shares pay a reliable dividend
Because of Westpac's defensive nature and consistent earnings, it can pay an attractive dividend to its investors. Westpac typically pays dividends twice per year. The bank most recently paid a fully franked final dividend of 77 cents per share to investors in December. For FY25, the bank paid a total of $1.54 per share, which equates to a dividend yield of 3.85% at the time of writing. This is forecast to increase to $1.605 per share in FY26, and again to $1.64 per share in FY27.
