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.
Image source: Getty Images
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.
