With a 6% fully franked dividend, does National Australia Bank Ltd. (ASX: NAB) have the #1 ASX dividend yield?
National Australia Bank: in 100 words
National Australia Bank is Australia's third largest bank by market capitalisation, worth roughly $85 billion (with a 'b') plus change. Like its fellow 'Big Four' brethren, NAB is a retail and business bank first and foremost. The bank has its roots in Australia and New Zealand, where it derives 84% and 12% of its profits, respectively. However, until very recently the bank also held direct interests in the UK and USA.
NAB controls almost 22% of Australia's business banking and 14.6% of household lending. It has 3.8 million online banking customers.
Dividends ahoy
Like its peers, NAB is renowned for paying superb dividends to shareholders. Although NAB's share price has not kept pace with that of its peers over the past decade, it has grown its tax-effective income at a very healthy clip over the long-term.
The chart above shows NAB's dividends over the past two and a bit decades. It pays two dividends to ASX shareholders each year, an 'interim' and 'final' dividend.
Looking forward, analysts are currently forecasting a fall in NAB's full year dividend payments, which totalled $1.98 per share last year.
According to consensus analyst estimates, the bank will pay dividends equivalent to $1.94 per share in the year ahead. That forecast comes despite the bank issuing a decent first quarter profit and lower bad debts earlier this month.
The problem for analysts appears to be that profits could fall in 2017.
And they could be right. House price growth, which has driven profits higher in recent years, could slow as many expect, competition could continue to increase, etc.
However, even if the bank lowers its dividend payment to $1.94 per share, it's still a hefty dividend yield of 6% at today's prices.
Buy, Hold or Sell NAB shares
I wouldn't go so far to say NAB shares have the number-one dividend yield on the ASX. However, it is certainly in my top 20.
Personally, I prefer shares with big dividends and growth.
