Despite announcing a larger than expected cut to its dividend, the National Australia Bank Ltd (ASX: NAB) share price has held firm since the release of its half year results.
In fact, on Friday morning the banking giant's shares have edged 0.25% higher to $25.76.
Should you invest?
Whilst I wasn't blown away with NAB's half year result, I saw enough in it to maintain a positive view on the bank for the time being.
I'm not alone in feeling this way. Goldman Sachs may have downgraded Australia and New Zealand Banking Group (ASX: ANZ) shares after its half year results, but it has held firm with its buy rating on NAB's shares.
According to the note, the broker has retained its buy rating but trimmed the price target on its shares slightly to $30.24.
Its analysts said: "NAB's well contained cost growth, above peer 1H19 loan growth and relative tailwind from mortgage repricing, provides us with comfort around the relative underlying momentum of the business."
In addition to this, the broker believes that NAB is well-placed to meet APRA's unquestionably strong benchmark by the required date following the announcement of various capital initiatives.
Another reason that Goldman Sachs is positive on the bank is due to its valuation. It notes that NAB's shares are trading at a 10% discount to the forward price to earnings ratios of its peers and offer one of the most generous dividend yields in the sector. Even after the sizeable cut to its interim dividend, its shares offer a forward fully franked 6.5% yield.
Based on this dividend yield and the broker's price target, this means NAB's shares offer a potential total return of around 24% over the next 12 months.
All in all, I feel this could make it worth considering along with fellow banks ANZ and Westpac Banking Corp (ASX: WBC) if you don't already have meaningful exposure to the sector.
