This morning National Australia Bank Ltd (ASX: NAB) released its full year results and revealed a huge increase to its dividend.
Though, that hasn't been enough to stop the banking giant's shares from sliding lower today.
In early afternoon trade, the NAB share price is down 2% to $28.50.
NAB doubles dividend
While shareholders may be disappointed to see the NAB share price in the red today, they will no doubt be pleased to see the bank grow its dividend materially in FY 2021.
In case you missed it, the banking giant reported cash earnings of $6,558 million in FY 2021. This was up 76.8% over the prior corresponding period and allowed the NAB board to declare a fully franked final dividend of 67 cents per share. This was ahead of what the team at Morgans was forecasting. The broker was expecting a final dividend of 64 cents per share.
This brought the full year NAB dividend to $1.27 per share fully franked, which was up 112% on FY 2020's 60 cents per share dividend.
Based on its cash profits, this dividend represents a payout ratio of 63.7% of earnings. This is likely to increase in the future with NAB announcing plans to adjust its capital and dividend settings during FY 2021. It will now target a payout ratio range of 65% to 75% of cash earnings.
NAB's Non-Executive Director and Chair, Philip Chronican, commented: "We are pleased to have increased dividends across the full year to 127 cents per share, compared to a reduced level in 2020. This outcome is closer to the level of shareholder return the Board is targeting going forward, with future dividends to be guided by a target payout ratio range of 65-75% of sustainable cash earnings, subject to circumstances at the time."
When will shareholders be paid?
According to the release, the final 67 cents per share fully franked NAB dividend will be paid to eligible shareholders in approximately five weeks on 15 December.
To be eligible to receive this payment, investors need to be owning the bank's shares before they trade ex-dividend on Monday 15 November. This means you'll need to own them at Friday's close. If you don't and you buy shares on Monday or afterwards, the rights to the dividend will remain with the seller.
