Doug Goodwille from Kayne Anderson speaks to Drew Meredith from The Inside Network on market thinkers.
While a surging gold price is on hold as the world adjusts to a Trump presidency, all the factors that saw its price rise more than 50 per during his first term in office – trade disputes, fiscal deficits and geopolitical tensions – are almost certainly guaranteed the second time around.
Westpac delivers the goods with higher dividend and billion-dollar buyback
Westpac (ASX:WBC) is upbeat about 2025, with outgoing chief executive officer Peter King (pictured) using last week’s annual results to tell shareholders the domestic economy was showing positive signs.
He noted consumer sentiment had risen to a two-and-a-half year high, the labour market was holding up and inflation was nearing its target (between two and three per cent), with the latter suggesting the Reserve Bank was likely to follow other central banks and start easing monetary policy next year.
“This cut in interest rates will be good news for many households and businesses. Combined with an undersupply of housing, population growth and limited spare capacity across much of the business sector, we expect solid demand for housing and business credit in 2025,” he said.
His major note of caution was geopolitical uncertainty that was always difficult to predict, and it therefore made sense for the bank to maintain a strong balance sheet.
Welcoming incoming CEO Anthony Miller (formerly chief executive of Westpac’s business and wealth division), King said he was pleased to hand over a bank that was in very good shape. Over the past 12 months, the share price has risen by 60 per cent, closing on Tuesday at $32.10.
“Westpac is a simpler, stronger bank and we are better at managing risk. Our people are highly engaged with an organisational health index score ranking in the top quartile globally. Following a period of simplification of the bank, I know our people are excited about the next phase of growth.”
To help give shareholders a positive outlook on 2025, Westpac declared a fully franked final dividend of 76 cents a share, contributing to a total ordinary dividend of 151 cents a share for the 2023-24 financial year – a six per cent increase from the previous financial year.
This increase in dividend distribution underscores Westpac’s strong financial performance, solid capital base and its intent to reward shareholders.
The bank also increased its share buyback program by an additional $1 billion, providing an alternative means of returning value to shareholders.
The bank’s capital strength, evidenced by a CET1 capital ratio of 12.49 per cent, has given it the flexibility to increase dividends and commit to share buybacks without compromising its financial stability. This strong capital position is crucial for maintaining shareholder confidence, especially in uncertain economic times.
Westpac’s dividend distribution is fully franked, giving Australian shareholders a tax credit for the 30 per cent corporate tax Westpac pays. This franking benefit effectively increases the post-tax value of the dividend for eligible shareholders. The final dividend will be paid on December 19, 2024, to shareholders on the register on November 8.
In addition to the cash dividend option, Westpac offers a dividend reinvestment plan, allowing shareholders to reinvest their dividends in additional shares at no extra cost, allowing shareholders to increase their Westpac investment without incurring brokerage fees. For this dividend, shares will be issued at the average price over 15 trading days, from November 13 to December 3, 2024, without any discount.
King said the bank’s focus on operational strength and customer service were the key drivers of its improved financial performance. “Our disciplined performance in the 2023-24 financial year has set Westpac up for growth and success.”
