Westpac WBC strategic investment thesis

Westpac is starting to look interesting at prices around $26, especially if you can acquire before it goes ex-dividend in November.

Whenever I buy a position close to an ex dividend, I treat the dividend as a capital return (not for tax purposes but for investment entry prices).

The November dividend should be around 88c.
subtracting this from the share price gives a net entry price around $25.50

$25.5 represents a very good FIRST entry point in my opinion.

Why first?
because it's very hard buy at the bottom.
So I use a "dribble" approach.

At $25.50 PE is near 10yr low.
expected dividends will be around 7.2% fully franked.
Historicaly speaking buying at a 7% fully franked yield has produced decent future returns.

Of course both future yields and future PE depends on future earnings,but according to commsec the market is still forecasting increased earnings two yrs out ( albeit only small increases).

If future earnings become negative then obviously the share price could decline further based on fundamentals.

But that's why I use a dribble approach.

I bought this week.
This is my first purchase of a big four bank since the GFC.