Is It The Right Time To Buy ASX Banking Stocks?

The ASX 200 lost 8.90 points or 1.08% to 7,196.70 on Wednesday. Today’s weak performance contributed to extending losses of 1.5% in the previous session and closing at 4-week lows. The risk sentiment soured amid rising long term bond yields ahead of an expected Federal Reserve taper later this year. Furthermore, investors are moving away from growth stocks. Mining heavyweights fell further on fears over production curbs due to a power crunch in China. Explore our list of 2  ASX Banking Stocks that is about to climb.

Our List of ASX Banking Stocks Of The Week That Needs Close Monitoring

If you are an income investor on the lookout for new additions to your portfolio, banks are usually top of the list. These dividend shares provide above-average yields in the coming years. Here is what you need to know about these dividend shares:

Westpac (ASX: WBC)

The Aussie banks have been back in favour for a while now. The low-interest-rate environment and reduced regulations around lending have resulted in WBC being able to increase its lending business. It has been a promising start to FY21 with increased cash earnings, growth in mortgages and continued balance sheet strength. First-half earnings were considerably higher than the prior corresponding period. This was due to an impairment benefit reflecting improved asset quality and a better economic outlook. New lending for housing has surged, up 49 per cent over the past year, including a 75 per cent jump from the May 2020 low. Westpac announced an interim dividend of 58 cents a share in light of the positive performance where statutory net profit increased by 189% to $3.4 billion, compared to the previous corresponding period.

We have seen WBC shares performed relatively well given the recent tumultuous market volatility. What we like about this bank is its solid balance sheet. Furthermore, Westpac is also embarking on a strategy to cut costs which should result in increased profitability and thus increased dividends for WBC shareholders. WBC shares currently trade at $25.17 a share with a solid dividend yield of 3.40%.

National Australia Bank Ltd (ASX: NAB)

NAB is part of the big 4 Aussie banks and as we all know, the banks have been performing extremely well in challenging operating conditions. NAB shares are now trading around levels seen before the pandemic. Increased lending to retail customers and businesses has increased as the government’s stimulus and deregulations around lending have done their bit. The increased lending has offset the low-interest rate and NAB has been able to perform well. More importantly, dividends are back for the banks, and this has caused investors to become upbeat about the banks once again. Recently, NAB also announced its intention to buy back up to $2.5 billion of its ordinary shares on-market to progress managing its Common Equity Tier 1 (CET1) towards its target range of 10.75–11.25%.

NAB shares have been brought back since earlier this month and the NAB stock has been one of the top-quality blue-chip stocks to consider for some time now. NAB could be the ideal allocation to increase income in your portfolio. Hence, the bank is offering a solid dividend yield of 3.26%. Moreover, its share price is pretty solid as well. Despite the recent surge in volatility on the market, NAB shares held well and returned more than 20% year-to-date. The recent broad market pullback could be an opportunity to grab some NAB shares. NAB shares currently trade at $27.24 a piece.