Can Westpac shares deliver a competitive dividend yield and 20% upside in FY23?

An attractive woman sits at her computer with her chin resting on her hand as she contemplates the WAM Alternative Assets listed investment company as a potential investmentAn attractive woman sits at her computer with her chin resting on her hand as she contemplates the WAM Alternative Assets listed investment company as a potential investment

It’s been a busy week for the Westpac Banking Corp (ASX: WBC) share price amid the Reserve Bank of Australia’s (RBA’s) decision to hike the nation’s cash rate by another 50 basis points.

Luckily, one top broker is still expecting big things from the bank. Indeed, it’s been tipped to gain anther 19%.

At the time of writing, the Westpac share price is $21.94. That’s nearly 2% higher than it ended last week.

For comparison, the S&P/ASX 200 Index (ASX: XJO) has lifted 0.9% so far this week while the S&P/ASX 200 Financials Index (ASX: XFJ) has gained just 0.7%.

So, what’s been going on with the banking giant and why are experts bullish on its future? Let’s take a look.

Is the Westpac share price set to surge 19%?

The Westpac share price has been on the up and up this week despite Australia’s interest rate being hiked to 1.85% on Tuesday.

The RBA made the decision to up the offical cash rate for a fourth consecutive month in a continuing effort to battle inflation.

Such moves spell both good and bad news for ASX 200 banks. It means they can reprice their loans and, as a result, increase their net interest margins (generally resulting in higher profits). However, it can also drag on housing prices and increases the risk of mortgage foreclosures.

Westpac followed the Commonwealth Bank of Australia (ASX: CBA)’s lead yesterday, upping interest rates on its home loans and deposits by the full 50 basis points.

But, despite this year’s cacophony of interest rate news, one broker is still notably bullish on Westpac.

Goldman Sachs has slapped Westpac shares with a $26.12 price target and a ‘conviction buy’ rating, as my Fool colleague James reports.

The broker is also tipping the bank to pay out $1.23 of dividends in financial year 2022 and $1.35 in financial year 2023.

That represents dividend yields of 5.6% and 6.2% respectively on its current share price or 4.7% and 5.2% on the broker’s targeted price.

The post Can Westpac shares deliver a competitive dividend yield and 20% upside in FY23? appeared first on The Motley Fool Australia.

Should you invest $1,000 in Westpac Banking Corp right now?

Before you consider Westpac Banking Corp, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Westpac Banking Corp wasn’t one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

See The 5 Stocks
*Returns as of July 7 2022

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs. The Motley Fool Australia has recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/umxenHg

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s