The NAB (ASX:NAB) dividend doubled in FY21: Here’s what you need to know

NAB’s dividend grew materially in FY 2021…

| More on:
It's raining cash for this man, as he throws money into the air with a big smile on his face.

Image source: Getty Images

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.

Should you invest $1,000 in NAB right now?

Before you consider NAB, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and NAB wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

Motley Fool contributor James Mickleboro 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

A man raises his reading glasses in a look of surprise.
Bank Shares

Could Bank of Queensland shares deliver 46% upside AND a 4.5% dividend yield in 2022?

One broker is predicting a bright future for this bank stock.

Read more »

a man with a wry smile is behind ascending piles of coins as he places another coin on top of the tallest stack.
Share Market News

Can ASX 200 banks really see a 15% profit jump if the cash rate hits 1%?

These analysts are predicting big returns for banks in the rising interest rate environment.

Read more »

A man sits in deep thought with a pen held to his lips as he ponders his computer screen with a laptop open next to him on his desk in a home office environment.
Bank Shares

Why I think NAB shares could be the smartest big four ASX bank to buy

NAB looks like a solid bank to own in my opinion.

Read more »

A woman sits at her computer in deep contemplation with her hand to her chin and seriously considering information she is receiving from the screen of her laptop regarding the Xero share price
Bank Shares

Can the Macquarie share price reach $200 again in 2022?

Macquarie shares have had a tough run so far this year.

Read more »

A mle runner is in an awkward pose as the approaches an unever part of a running track through a forest with tall trees and sunlight shining through them.
Bank Shares

Latest Westpac review notes progress but flags ‘bank’s difficulty in staying the course’

The bank released independent reports on its risk governance progress.

Read more »

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

CBA share price higher on customer experience update

CBA is building new and innovative customer experiences...

Read more »

A middle-aged woman sits in contemplation over a tablet device considering information about ASX shares and deep in thought.
Bank Shares

Is the NAB share price cheap with its recent pullback?

Here's the verdict according to analysts.

Read more »

An ASX shares broker analysing a chart tracking the A2 Milk share price
Bank Shares

Here’s why the CBA share price could soon be in for some pain

Is it buy or sell for CBA shares today?

Read more »