National Australia Bank Ltd (ASX: NAB) shares have been a relatively good place to invest your money this year.
Since the start of 2022, the banking giant's shares have risen almost 3.5%.
In addition, they have provided investors with total fully franked dividends of $1.51 per share. This equates to a 5% dividend yield, which stretches the total return to approximately 8.5%.
As a comparison, over the same period, the S&P/ASX 200 Index (ASX: XJO) is down 6.5% year to date. And even when including dividends, the total return for the index is still in negative territory at -2.4%.
All in all, this means NAB shares have outperformed by almost 11% in 2022.
Should you buy NAB shares for 2023?
The good news is that despite their outperformance this year, one leading broker believes NAB shares can do it all again in 2023.
A recent note out of Goldman Sachs reveals that its analysts have a buy rating and $35.41 price target on the bank's shares. Based on its current share price of $30.33, this implies potential upside of almost 17% for investors over the next 12 months.
Goldman is also expecting an attractive dividend yield of 5.7% in FY 2023, based on dividends of approximately $1.74 per share. This stretches the total potential return to over 22%.
Double-digit returns to continue
But the even better news is that Goldman Sachs believes double-digit returns will be possible for the next three years, not just in 2023. It commented:
The major Australian banks have been in the midst of an EPS upgrade cycle, with 12-month forward EPS having increased by an average of 21% p.a. over the last two years. However, the outlook is now less optimistic, with 12-month forward EPS now only representing a c. 4% p.a. tailwind to share prices over the next three years. Despite this, the outlook for our two Buy stocks, WBC (on CL) and NAB, is better, and […] we think double digit total shareholder returns remains achievable over the next three years.
All in all, this could make NAB shares a top option for anyone looking for banking sector exposure in 2023.
