WBC - Westpac Banking Corporation

[Ves]

More importantly is the current dividend sustainable? Otherwise this could turn into the classic "yield trap."

I am no expert, but would it take a GFC II or a housing market crash for the banks to cut their dividend?

 

[oldblue]

More importantly is the current dividend sustainable? Otherwise this could turn into the classic "yield trap."

I am no expert, but would it take a GFC II or a housing market crash for the banks to cut their dividend?

Most banks did reduce their dividends as a result of GFC but have grown them again since. Certainly, the same could happen again.

No guarantees of course but unlikely IMO to become yield traps in the usual sense, ie where earnings collapse more or less permanently.

 

[Ves]

The only other "risk" in such a yield play is that the dividend stays the same for an extended period of time and gets eaten away by inflation.

I am seriously considering growing my holdings in the banks at these levels though. But I will wait a few weeks to see what they do price wise. The charts point to an even higher yield / lower price at this point in time.

 

[UMike]

It would appear that a section of the market agrees with your analysis. Westpac closed higher than it opened. Also, comparing wbc with the other three big aussie banks, wbc fell proportionaly less yesterday than the other three.

This point is interesting in that: WBC has more overseas borrowings than the other three; WBC is seen as having more exposure to the mortgage sector in NSW than the other three and; the market (and hedge funds) has been pushing wbc down further than the other three.

Yesterday wbc had a higher than normal turnover. Buyers appear to see wbc as the better bargain of the banks. At this point wbc has a low price earnings ratio, a good yield (dividend plus franking credits) and the long term prospects of a good capital gain when it returns to normal pricing levels.

As always, do your own research.

Well I just got 1000 @19.75 .....

Hope there is good US jobs data.

 

[nulla nulla]

Well I just got 1000 @19.75 .....

Hope there is good US jobs data.

It is going to get cheaper today. Panic hit the djia, ftse and the dax last night and our xao will follow suite today. Finance shares such as wbc will likely drop another 2% plus. Hope I'm wrong.

 

[alexandro]

Should it? Why?

Finally a Japanese reversal candlestick and a bounce. I was 4 trading days late but it came. And at least I was one person who mentioned numbers like $20, $19 and then $17.50 in that order in previous recent posts. The unexpected and favourable? We'll it was the cut in interest rates where every man was talking rising rates. A QE3 is also on the cards now.

Julia, check spelling and make comments please. Or are you cranky again?

 

[nulla nulla]

Strong support on good volumes. Would like to see the share price start to recover from here. However, wbc is not out of the woods yet and more stability is needed in the international markets.



Notwithstanding, wbc is incredibly good value at this level and it would take a massive increase in the cost of funding, combined with rising interest rates and massive mortgage defaults for wbc to lose it's way. IMO.

 

[Julia]

Notwithstanding, wbc is incredibly good value at this level and it would take a massive increase in the cost of funding, combined with rising interest rates and massive mortgage defaults for wbc to lose it's way. IMO.

Agree. Given the apparent likelihood of falling deposit rates on online at call accounts, I'm close to being persuaded back into WBC. Grossed up div is very good.

Nulla, what are your thoughts about CBA?

 

[nulla nulla]

Agree. Given the apparent likelihood of falling deposit rates on online at call accounts, I'm close to being persuaded back into WBC. Grossed up div is very good.

Nulla, what are your thoughts about CBA?

Hi Julia

I have thrown an update post in the CBA thread. If I had been cashed up yesterday I would have bought in the downward spike.

 

[fanger]

I picked this up the other day around $18.25 I couldn't resist the yeild at that price.

 

[nulla nulla]

I picked this up the other day around $18.25 I couldn't resist the yeild at that price.

Good on you. At todays high of $20.52 (roughly 12:30pm) you have a capital gain of $2.27 or 12.44%.

 

[kid hustlr]

I really like Julia's and nulla's thoughts. WBC does look inviting imo but I'm hesitant to dive head first given the current craziness of the markets. I'll most likely take the newbie wait and see approach and then re-assess in a month or so. If I miss the boat, so be it.

 

[Julia]

I really like Julia's and nulla's thoughts. WBC does look inviting imo but I'm hesitant to dive head first given the current craziness of the markets. I'll most likely take the newbie wait and see approach and then re-assess in a month or so. If I miss the boat, so be it.

Sensible approach. The market will always be there. And, given the global mess, this volatility will also be there for a while to come.

 

[Muschu]

Sensible approach. The market will always be there. And, given the global mess, this volatility will also be there for a while to come.

Hi Julia

I agree -- although maybe there is a case for having a toe in the water rather than a foot out of it?

Basically it is a game... A relative phoned me today and said he might go back into race horses as a less risky alternative....

 

[nulla nulla]

Hi Julia

I agree -- although maybe there is a case for having a toe in the water rather than a foot out of it?

Basically it is a game... A relative phoned me today and said he might go back into race horses as a less risky alternative....

As an owner, trainer, jockey or punter?
As a punter you plunk your money down and either win or do the lot. As a share investor you get to pull your capital out with a small profit or a small loss. At least you don't do the lot.

 

[blue0810]

Share trade is a tough game. Like any other game you need to know how to play it.

 

[nulla nulla]

Nice bounce of the interday low off $17.84 on panic Tuesday. Started well today at $20.75 then drifted steadily down to the low of $20.31. Strong support in the closing auction saw the price recover a little to $20.47.

Banks generally did not do well today. Internationaly there were some big sell downs overnight and the aussie banks seemed to get caught up in it today. International Hedge funds are alleged to be shorting banks in anticipation of another credit squeeze.

The local Bank reporting season is underway and I expect wbc to post a larger profit than before probably with a low key forecast reflecting the tight conditions we are living in. Don't be surprised if the analysts say it is not good enough and start another sell down.

 

[oldblue]

The local Bank reporting season is underway

Not quite

CBA is the odd man out with a June balance date. The other three of the four pillars don't count the cash until 30 September and will report mid to late October.

WBC still a good punt though, IMO.

 

[nulla nulla]

Not quite

CBA is the odd man out with a June balance date. The other three of the four pillars don't count the cash until 30 September and will report mid to late October.

WBC still a good punt though, IMO.

lol. would you believe it is a long reporting season?

 

[nulla nulla]

Westpac is due to provide a quarterly update today. Should be interesting.