Westpac Banking Corporation (ASX:WBC) Will Pay AU$0.94 In Dividends
Important news for shareholders and potential investors in Westpac Banking Corporation (ASX:WBC): The dividend payment of AU$0.94 per share will be distributed to shareholders on 20 December 2018, and the stock will begin trading ex-dividend at an earlier date, 13 November 2018. Is this future income stream a compelling catalyst for dividend investors to think about the stock as an investment today? Let’s take a look at Westpac Banking’s most recent financial data to examine its dividend characteristics in more detail.
Check out our latest analysis for Westpac Banking
5 checks you should use to assess a dividend stock
When assessing a stock as a potential addition to my dividend Portfolio, I look at these five areas:
Does it pay an annual yield higher than 75% of dividend payers?
Has it paid dividend every year without dramatically reducing payout in the past?
Has dividend per share risen in the past couple of years?
Is is able to pay the current rate of dividends from its earnings?
Will it have the ability to keep paying its dividends going forward?
How well does Westpac Banking fit our criteria?
Westpac Banking has a trailing twelve-month payout ratio of 79%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 79%, leading to a dividend yield of around 6.9%. In addition to this, EPS should increase to A$2.44.
If you want to dive deeper into the sustainability of a certain payout ratio, you may wish to consider the cash flow of the business. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
Reliablity is an important factor for dividend stocks, particularly for income investors who want a strong track record of payment and a positive outlook for future payout. Although WBC’s per share payments have increased in the past 10 years, it has not been a completely smooth ride. Investors have seen reductions in the dividend per share in the past, although, it has picked up again.
In terms of its peers, Westpac Banking has a yield of 6.8%, which is high for Banks stocks.
Next Steps:
Taking into account the dividend metrics, Westpac Banking ticks most of the boxes as a strong dividend investment, putting it in my list of top dividend payers. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three key factors you should further examine:
Future Outlook: What are well-informed industry analysts predicting for WBC’s future growth? Take a look at our free research report of analyst consensus for WBC’s outlook.
Valuation: What is WBC worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether WBC is currently mispriced by the market.
Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
