3 reasons to stick with your National Australia Bank Ltd shares

National Australia Bank Ltd.  (ASX: NAB) has the dubious honour of being the worst performing of the big 4 banks over the past five and 10 years. It also only just avoids – thanks to a weak 12-month return from Westpac Banking Corp (ASX: WBC) – holding the record over one year as well!

The past decade has not been kind to NAB shareholders with the stock gaining just 17%. In comparison the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) has gained 61%, while the return from the Commonwealth Bank of Australia (ASX: CBA) has been an outstanding 157%. Despite this past underperformance it is of course future expectations which count and on this score there is reason for shareholders to be hopeful.

The release of NAB’s interim results this week has given investors new information to work with. Here are three reasons to stick with your National Australia Bank shares.

1)      The bank has declared a record high fully franked dividend of 99 cents per share. The announcement of this dividend is not just an all-time high interim dividend but it is also more than the highest final dividend ever paid which was 97 cps for the year ending 30 September 2013.


2)      Cash earnings increased half-on-half by $247 million or 8.5% to $3.15 billion; on a per share basis this equated to $1.31. The earnings growth was achieved despite a weak revenue result.


3)      The underperforming UK division appears to be on the mend. Cash earnings in UK banking improved 121% for the half, while the losses from the UK residential real estate business which is in “run-off” fell dramatically as the run-off nears completion.

Whether you are looking to invest in a company which is struggling or one which has been kicking goals left, right and centre, it’s very important to not let the past cloud your judgement of the future.

For this reason, bank shareholders cannot afford to miss reading the following report..

Fact: Australia's large banks had an incredible run in 2013. But some top analysts are saying the trend could stop dead! Get the inside scoop in The Motley Fool's brand-new FREE investment report, "What Every Bank Shareholder MUST Know."

Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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