ANZ vs Westpac shares: Which big four bank is the better buy for $5,000?

ANZ vs Westpac shares: Which big four bank is best for your $5,000?

If you’re thinking about investing in one of Australia’s big four banks, odds are you’re weighing up ANZ Group Holdings Ltd (ASX: ANZ) and Westpac Banking Corporation (ASX: WBC) Both are banking giants with deep roots in the Aussie and Kiwi economies, and both offer investors a slice of the nation’s financial backbone. But if you had $5,000 to put to work, which should you choose? Let’s look at the key differences between ANZ and Westpac shares.

The case for ANZ

ANZ is a powerhouse of Australian banking, tracing its roots back to 1969 and now serving over 8.5 million customers, according to its company profile. ANZ covers just about every corner of the banking world, from retail and small business to corporate and institutional clients, and its operations stretch across 30 international markets, including major presences in Australia, New Zealand, Asia Pacific, the UK, and the US.

A couple of the big-ticket fundamentals stand out:

• Market cap: $115.51 billion – making ANZ one of the largest stocks on the ASX
• P/E ratio: 19.46 – a touch above Westpac, suggesting investors are willing to pay more for each dollar of earnings
• Dividend yield: 4.32% – steady income but not the top among the big four
• Franking: 75% – lower than fully franked rivals, potentially less appealing for those seeking maximum franking credits

Looking at its dividend history, ANZ has a long record of reliable payments, though recent years have seen some reductions in franking levels. The most current interim dividend is $0.83 per share, 75% franked.

The case for Westpac

Westpac is the oldest banking institution in Australia, launched in 1817 as the Bank of New South Wales before becoming Westpac Banking Corp in 1982. These days, it stands tall as one of the big four, serving millions of Australian and New Zealand customers under multiple brands like Westpac, St.George, Bank of Melbourne, BankSA, and BT. The group covers everything from consumer and business banking to institutional services and wealth management.

Key fundamentals for Westpac include:

• Market cap: $118.65 billion – slightly ahead of ANZ, putting it near the very top of the big four by size
• P/E ratio: 17.33 – lower than ANZ, which could suggest better relative value if both banks face similar outlooks
• Dividend yield: 4.38% – slightly higher than ANZ, and every cent counts for income seekers
• Franking: 100% – meaning fully franked dividends, which is a bonus for investors who can use franking credits

Westpac’s dividend payment history is also strong, with regular dividends and, notably, fully franked payouts. Its most recent interim dividend is $0.77 per share, fully franked, plus a $0.15 special dividend in 2024.

Valuation comparison

Here’s how ANZ and Westpac stack up on the main investment yardsticks:

Note: ANZ’s reported P/E ratio may be based on a different earnings measure than the EPS shown, which can lead to apparent inconsistencies.

Overall, Westpac looks just a little more attractive on both P/E ratio and dividend yield. Its fully franked dividends could also make a meaningful difference for some investors. ANZ edges ahead on dividend per share, but Westpac’s higher franking boosts its after-tax income for most Aussies.

Recent share price momentum

Comparing recent share price performance up to14 October 2026:

• ANZ: Closed at $38.30. Year-to-date return is a solid 7.9%.
• Westpac: Closed at $34.69. Year-to-date return is -6.9%, meaning its share price has lagged in 2026.

Just in the past fortnight of data provided, both shares have seen daily ups and downs, but the real story is in the overall 2026 trend: ANZ is up, while Westpac is down.

Which is the better buy?

If I had $5,000 to invest in one of these banks today, I’d lean toward ANZ. Here’s my reasoning: While Westpac edges out ANZ on dividend yield and offers fully franked dividends, ANZ has meaningfully outperformed in recent months, posting a near 8% gain year-to-date while Westpac’s shares are in the red. The market is putting a slightly higher valuation on ANZ, reflected in its P/E, and while that does often mean higher expectations, I think the combination of global exposure, steady growth, and recent price strength tips the scales in ANZ’s favour. Westpac is no slouch, and its fully franked dividends are a real drawcard for income hunters, but the negative price momentum worries me here. For a blend of reasonable income, international reach, and current momentum, my pick would be ANZ.

The post ANZ vs Westpac shares: Which big four bank is the better buy for $5,000? appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial draft. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.