Ask any ASX dividend income investor, and they will probably tell you that their passive income portfolio contains at least one ASX 200 big four bank share. And National Australia Bank Ltd (ASX: NAB) shares would certainly be a good guess.
Like other big four banks such as Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC), NAB shares have a long-built reputation as dividend machines.
NAB has actually had a very decent few years on the ASX. In years gone by, NAB was typically the smallest ASX bank by market capitalisation, coming in behind CBA, Westpac and ANZ Group Holdings Ltd (ASX: ANZ).
But today, NAB is comfortably sitting in the number two position, only behind CBA in terms of size. This is mostly thanks to NAB shares holding their ground steadily over the past few years, while Westpac and ANZ have both been big money losers:
But we should never use past reputations or performances alone to analyse the merits of investing in any ASX share for the future. So let's look at NAB's dividends today and just how much income investors can expect from NAB shares going forward.
What is NAB's current dividend yield?
Like most ASX dividend shares, NAB has paid out two dividends over the past 12 months. Investors received an interim dividend of 73 cents per share in May last year, as well as a final dividend of 78 cents per share in November. Both payments came fully franked, as is typical for a big bank share.
That 2022 total of $1.51 per share was a pleasing rise over 2021's total of $1.27 per share. But we're still not back to the $1.98 in annual dividends NAB shares were dishing out in 2018.
Even so, this represents solid income for investors. That total of $1.51 per share gives the NAB share price a trailing dividend yield of 5.25% right now. So if an investor had $10,000 worth of NAB shares, bought at today's pricing, they would have bagged $525 in dividend income over the past 12 months. That's more than any savings account or term deposit offered by NAB itself right now.
But what about the future? Should investors expect the same level of passive income from NAB's dividends going forward?
Are NAB shares a buy for passive income?
Well, there's no way to tell right now, since dividends are always at the discretion of the company at the time of their payment.
But we can check out what a top ASX broker reckons.
As my Fool colleague James covered just this morning, ASX broker Goldman Sachs is bullish on NAB's future. For one, it has a buy rating with a 12-month share price target of $33.06 on the ASX bank right now.
But when it comes to dividends, Goldman is also optimistic. It has pencilled in a 12-month total of $1.68 in dividends per share for the 2023 financial year, and again for FY2024.
If that turns out to be accurate, it would give NAB shares a forward dividend yield of 5.85% on the current share price.
So it seems that NAB is set to continue to fund large, fully-franked dividends for its investors going forward, if Goldman is on the money of course.
