The NAB (ASX: NAB) share price climbed 2.7% to $23.96 today, but before investors get carried away it's worth noting its still down around 18% over the past year. Once you adjust for dividends received your total return would still be a loss of around 12% if you had bought the shares this time last year.
As a blue-chip favourite of SMSF and mum and dad investors around Australia a -12% total return is a poor outcome that is probably a result of market expectations that NAB will be forced to cut its dividends in FY 2019.
Over its last financial year ending September 30, 2018 NAB managed to hand out $1.98 per share in dividends to investors that place it on a trailing yield of 8.26% plus franking credits.
An excessively high dividend yield is often a sign that the market expects a dividend cut, with sell side brokers like Morgan Stanley publicly warning that dividend cuts could be coming on their analysis.
Investors then should keep this in mind before bargain hunting in the bank sector as the uncertain outlook for house prices, more regulation and rising costs could combine to hurt the banks in 2019.
