Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd. (ASX: NAB) shares are known for their big dividends and relative safety.

Combined, they make up a huge 12% of the entire S&P/ASX 200 (Index: ^AXJO) (ASX: XJO), yet they likely account for a much larger proportion of investors’ portfolios given their income characteristics.

Westpac

Westpac is Australia’s second largest bank, with a market capitalisation of $95 billion. It is one of Australia’s leading credit card providers and controls 25% of the lucrative Australian housing market. It has the largest exposure to investor property loans.

Westpac has been the most aggressive of the big four banks in its push towards a multi-branded portfolio. Its subsidiaries include Bank of Melbourne, St. George and BankSA.

Westpac shares trade on a trailing 6.4% fully franked dividend yield.

NAB

NAB is Australia’s top business bank with 22% share of the market, according to APRA’s latest banking statistics. It is Australia’s third-largest bank by market capitalisation.

While NAB’s history is somewhat blemished by alleged misconduct and write-downs of loans, under its current CEO Andrew Thorburn the bank has taken strides to rid itself of non-core assets and foreign subsidiaries. The challenge for the bank now is to focus on building out its balance sheet in a sustainable manner.

Given its relative undervaluation, NAB shares trade on a trailing dividend yield of 7.8% fully franked.

Better Buy

Likely a result of its poor track record for share price appreciation, NAB shares are the cheaper of the two banks.

Nonetheless, it could provide an opportunity for investors. If the bank can prove its days of aggressive expansion, underperforming assets and misconduct are behind it, shareholders may stand to benefit from a re-rating by analysts. The extra dividend is a bonus.

Foolish takeaway

If I had to choose one of these two big banks to add to my portfolio today, it’d be NAB. The 11% gross dividend is nothing short of impressive and the shares are cheaper than its peers. Having said that, however, I think shares in both banks currently trade above their fair value. Therefore, I’m not a buyer of either bank today and am instead looking to add other shares to my portfolio.

For example, this "dirt cheap" company is growing like gangbusters, and trading on a fat dividend yield, FULLY FRANKED. With interest rates set to stay at these low levels for years to come, for income-hungry investors, including SMSFs, this ASX company could be the "Holy Grail" of dividend plays for 2016. Click here to gain access to this comprehensive FREE investment report, including the name of this fast growing ASX dividend share. No credit card required.

HOT OFF THE PRESSES: Motley Fool’s #1 Dividend Pick for 2017!

With its shares up 155% in just the last five years, this ‘under the radar’ consumer favourite is both a hot growth stock AND our expert’s #1 dividend pick for 2017. Now we’re pulling back the curtain for you... And all you have to do to discover the name, code and a full analysis is enter your email below!

Simply enter your email now to receive your copy of our brand-new FREE report, “The Motley Fool’s Top Dividend Stock for 2017.”

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our https://www.fool.com.au/financial-services-guide">Financial Services Guide (FSG) for more information.

Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any company mentioned in this article. You can follow Owen on Twitter @ASXinvest.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.