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.
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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.
