Should you buy NAB (ASX:NAB) shares in August 2021 for the dividend yield?

We take a look at how NAB dividends stack up against the other big banks.

| More on:
guy helping girl invest in shares and dividends

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The National Australia Bank Ltd. (ASX: NAB) share price has been performing well lately, but is it a good buy for its dividends?

The NAB share price has gained 15.4% year to date, with Goldman Sachs analysts believing it will boost higher in the near future.

The bank also boasts a dividend yield of 3.39%.

But is August a good time to buy NAB shares for the dividends? And how does it compare to its S&P/ASX 200 Index (ASX: XJO) banking peers?

Let's take a look.

Is NAB worth buying for its dividend?

NAB has been handing out dividends to its shareholders since 1983.

Wondrously, between 2014 and 2018, NAB's interim and final dividends were consistently both 99 cents.

In 2019, both the bank's interim and final dividends were 83 cents. While in 2020, perhaps understandably, they slipped to 39 cents apiece due to the pandemic.

NAB's 2021 interim dividend was valued at 60 cents, leaving the company with a dividend yield of 3.39%.

Historically, the bank has announced its final dividend in November. It has also historically given a full-year dividend of the same value as its interim dividend.

That means it's likely NAB's 2021 final dividend will be worth 60 cents per share.

The NAB share price is predicted to gain in the near future, while its dividend might not increase until May 2022. Thus, August might be the time to get the most out of the bank's dividend yield.

Though, it's not wise to assume all expert predictions will prove fruitful and that NAB will follow its previous trends.

In addition, all dividends that the bank has handed to its shareholders since 2007 have been 100% franked.

That means some Australian investors can use the bank's dividends to reduce the amount of tax they pay.

So far, so good. At this point, NAB shares look like they could be a good August buy.

But how does the bank's dividend compare to its competitors?

Big four dividends

For comparison, the Commonwealth Bank of Australia (ASX: CBA) offers the smallest dividend yield of all the big 4 banks. Its dividend yield is 2.44%. Additionally, the CBA dividend has historically been less consistent than that of NAB.

The Australia and New Zealand Banking GrpLtd (ASX: ANZ) boasts the largest dividend yield of the big 4 – its dividends are worth 3.72% of its share price.

Westpac Banking Corp (ASX: WBC) is only doing slightly better than NAB, with a dividend yield of 3.56%.

Foolish takeaway

All in all, while the NAB dividend is strong, and it has been for many years, it currently isn't quite as strong as those of some other big banks.

Though, August is as good a time as any to buy the bank's shares for its dividends. Especially given its share price is predicted to increase.

However, all investments must consider an investor's individual circumstances and goals.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. 

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Bank Shares

Man holding Australian dollar notes, symbolising dividends.
Dividend Investing

An 8% yield on CBA shares? Here's how these passive income investors achieved it!

CBA pleased passive income investors with a 2.4% interim dividend boost.

Read more »

ASX expensive defensive shares man carrying large dollar sign on his back representing high P/E ratio or dividend
Bank Shares

CBA shares rally to new record high. Is $196 billion too much for this banking giant?

I think CBA shares have a number of problems right now...

Read more »

Focused man entrepreneur with glasses working, looking at laptop screen thinking about something intently while sitting in the office.
Bank Shares

Is it too late to buy Westpac shares at a fresh 52-week high?

I see only one reason to buy Westpac shares today.

Read more »

A man thinks very carefully about his money and investments.
Bank Shares

Is it time for me to change my tune about ANZ shares?

Have I underrated this ASX bank share?

Read more »

A woman wearing yellow smiles and drinks coffee while on laptop.
Bank Shares

3 things about CBA stock every smart investor knows

An investor doesn’t really know CBA unless they know these things about the bank.

Read more »

A man looking at his laptop and thinking.
Bank Shares

Why the CBA share price premium is 'difficult to justify'

ASX experts' calls that CBA shares are too expensive are getting louder.

Read more »

A man and a woman sit in front of a laptop looking fascinated and captivated.
Bank Shares

How come the NAB share price is still 26% below its all-time high?

NAB shares cost more than $40 back in 2007...

Read more »

A man looking at his laptop and thinking.
Bank Shares

Up 20% in 4 months, where's next for the CBA share price?

Have CBA shares finally hit their limits?

Read more »