Looking for juicy ASX dividends? This expert says Westpac shares are a buy

A couple working on a laptop laugh as they discuss their ASX shares portfolioA couple working on a laptop laugh as they discuss their ASX shares portfolio

One word effectively sums up global and Australian share markets right now: Volatility. And when you have volatility in play, your chances of share price appreciation are lower.

That’s why we’ve seen a shift in interest away from ASX growth stocks to ASX value stocks in 2022.

Value stocks tend to be larger, established companies that pay great dividends. When the prospects of capital gains are lower, we investors tend to shift focus to generating good dividend income.

One ASX share offering juicy dividends right now is Westpac Banking Corp (ASX: WBC).

Westpac dividend forecasts

Today, the Westpac share price closed down along with the rest of the market.

Westpac finished 0.73% in the red at a share price of $21.73. The S&P/ASX 200 Index (ASX: XJO) finished down 1.56% to 6,700.2 points.

As my fellow Fool James reports, Goldman Sachs has slapped a buy rating on Westpac.

Goldman forecasts fully franked dividends of $1.23 per share in FY22 and $1.37 in FY23. Based on the current Westpac share price, that’s a grossed-up yield of 8.1% and 9%, respectively. That’s juicy.

The broker says Westpac is its preferred exposure amongst Australian and New Zealand financial equities. It likes the bank’s latest quarterly update and says it has “strong leverage to rising rates”.

As my Fool friend Brooke notes, rising rates typically allow banks to reprice their loans. This can bolster their net interest margins and profitability.

Like other ASX 200 banks, Westpac has been trying to cut costs to improve its profitability.

Goldman doesn’t think Westpac will achieve its $8 billion cost target for FY24. However, the analysts still forecast a 7% reduction in underlying expenses.

Morgan Stanley also rates Westpac a buy. It forecasts an FY22 dividend of $1.25 and an FY23 dividend of $1.30.

What about the Westpac share price?

Goldman Sachs has a share price target of $26.55 on Westpac shares. Based on today’s closing price, that’s a potential gain of 22% over the next 12 months.

Goldman Sachs said:

Westpac now offers the most upside of the banks over the next 12 months. Beyond this, we note the stock is trading at a 20% discount to peers, versus the historic average 2% discount.

UBS is neutral on Westpac shares with a $26 price target â€“ representing a potential 20% upside.

Citi has a buy rating and a $30 price target on Westpac shares. That’s a potential 38% upside.

The post Looking for juicy ASX dividends? This expert says Westpac shares are a buy appeared first on The Motley Fool Australia.

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More reading

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Bronwyn Allen has positions in Westpac Banking Corporation. 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.

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