Was it a good idea to own Westpac shares in 2024?

Were the bank's shareholders smiling at the end of last year? Let's find out.

| More on:
Middle age caucasian man smiling confident drinking coffee at home.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Westpac Banking Corp (ASX: WBC) shares are a popular option for Aussie investors and feature in countless portfolios across the country.

But was the big four bank a good stock to hold in your portfolio in 2024? Let's crunch the numbers.

Was it a good idea to own Westpac shares in 2024?

Firstly, let's take a look at what the S&P/ASX 200 Index (ASX: XJO) did during the 12 months.

The benchmark index rose approximately 7.5% to 8,159.1 points in 2024 before dividends. And including dividends, the index delivered a return in the region of 11.2%.

This is ahead of the historical average return for investors which is roughly 10% per annum.

Did Westpac shares beat the market?

The good news for Australia's oldest bank's many shareholders is that Westpac didn't just beat the market, it hit it for six in the style of Sam Konstas.

Big returns for shareholders

The Westpac share price ended 2023 at $22.90 and then went on an almighty rally to finish last year at a lofty $33.32.

That's a stunning return of almost 46% for investors over the period and doesn't include dividends.

In FY 2024, Westpac paid out two fully franked dividends to shareholders. This was a 90 cents per share interim dividend (including a 15 cents per share special dividend) and a 76 cents per share final dividend.

Based on its starting price, this equates to a very generous 7.2% dividend yield for 2024, which boosts the total return to approximately 53% for the year.

To put that into context, a $20,000 investment in Westpac shares at the end of 2023 would have been worth approximately $30,600 a year later with dividends reinvested.

This is more than four times greater than the return of the market over the same period.

Why did its shares outperform?

Westpac and the rest of the big four banks have been on fire over the past 12 months with investors flooding back into the sector and driving their share prices higher.

This was driven by better than expected results in FY 2024 and the belief that the banks have escaped the RBA's interest rate hike cycle without experiencing any meaningful increase in bad and doubtful debts.

In respect to Westpac's results, in FY 2024, Westpac reported a 3% increase in net interest income to $18,916 million and a 3% decline in net profit to $6.99 billion. It also announced a $1 billion share buyback.

What's next?

One leading broker believes that Westpac shares can beat the market again in 2025.

A note out of UBS last month reveals that its analysts have put a buy rating and $37.00 price target on them. This implies potential upside of 13% for investors.

Motley Fool contributor James Mickleboro has positions in Westpac Banking Corporation. 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.

More on Bank Shares

Worried woman calculating domestic bills.
Bank Shares

Which 2 big ASX bank shares will be most impacted by RBA rate cuts according to Macquarie?

Which banks could see the most pain from RBA rate cuts?

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Earnings Results

Bank of Queensland share price lifts off on soaring profits and boosted dividend

ASX investors are piling into Bank of Queensland shares on Wednesday. Here’s why.

Read more »

A small child in a judo outfit with a green belt strikes a martial arts pose with his hand thrust forward.
Bank Shares

3 reasons to buy this quality ASX 200 bank stock today

Up 27% in a year, a leading expert forecasts more upside potential for this ASX 200 bank stock.

Read more »

A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer
Bank Shares

Is this the right time to invest in Westpac shares?

Is this blue-chip bank an appealing option right now?

Read more »

Woman and man calculating a dividend yield.
Bank Shares

2 ASX 200 bank stocks to sell today: Bell Potter

Bell Potter forecasts more headwinds in 2025 for these two ASX 200 banks.

Read more »

Two boys lie in the grass arm wrestling.
Share Market News

Regional bank battle:Bendigo Bank or Bank of Queensland shares?

Looking outside the big four? These two regional banks might be worth considering

Read more »

A man watches the share price movement closely.
Bank Shares

I want to buy CBA shares. What price should I pay?

What would be a good valuation to buy CBA at?

Read more »

Buy, hold, and sell ratings written on signs on a wooden pole.
Bank Shares

ANZ shares: Buy, sell, hold?

With the ANZ share price in retreat, the bank stock’s dividend yield is now at 6.2%.

Read more »