Westpac Banking Corporation (ASX: WBC) has been the big winner among the banks following the Federal election with shares up as much as 8% this morning.
About Westpac
Westpac Banking Corporation, more commonly known as Westpac, is one of Australia’s ‘Big Four’ banks and a financial-services provider headquartered in Sydney. Alongside Commonwealth Bank of Australia (ASX: CBA), Westpac is a leading lender to homeowners, investors, individuals (via credit cards and personal loans) and businesses.
Dividend Yield is Enticing
Westpac’s 7.4% dividend yield is drawing investors back in now that fears of franking credit changes are a thing of the past. Westpac shares were trading lower late last week after they went ex-dividend, but all of those losses have been recouped today in under an hour.
While all four of the big banks are rising, the dividend yield seems to determine how much they will rise. National Australia Bank Ltd (ASX: NAB) shares are up 6.5%, with investors flocking to their 7.6% dividend yield.
Could This Be a Turning Point for Banks?
While most of the big four banks have seen their share prices gradually increasing over the last few months, this election may be the catalyst they need to kick-start share price growth again.
However, Australia remains in a low interest rate environment that is putting increasing pressure on their margins. Several smaller banks have cut home loan interest rates lately, which could see new buyers moving away from the big four banks unless they can match the rates.
Outlook
While a Coalition win is certainly beneficial for the banks today, it doesn’t solve all their problems. Personally, I’m not rushing to invest in the banks just because of the election win.
All things considered, I’d still be more comfortable investing in one of the companies mentioned in the free report below.
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Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.