As an ASX 200 big four bank share, National Australia Bank Ltd (ASX: NAB) has always been a popular choice for dividend investors. Bank shares are well-known for showering their shareholders with dividend income, and NAB is no different.
As it stands today, the NAB share price offers a dividend yield of 6.09%. That comes fully franked as well, which could boost this yield to a grossed-up 8.7%.
Yet this yield, like all trailing dividend yields, reflects the past, not the future. It is derived from NAB's past two dividend payments – the final dividend worth 78 cents per share from December, and the interim dividend worth 83 cents per share that will come in July (the ex-dividend date has passed, so it is prudent to include it in the current yield).
However, there is no guarantee that investing $1,000 into NAB shares today will bag you $60.60 in dividend income over the next 12 months. That depends on NAB's next interim and final dividends.
Well, these upcoming payments have caught my attention, thanks to some insights from ASX broker Goldman Sachs. As we covered here last week, Goldman Sachs has come out with a buy rating for the NAB share price, together with a 12-month share price target of $30.39. That would represent a 16% rise over the current NAB share price. But that's not what excites me the most about Goldman's analysis.
The broker is also expecting that the bank will be able to initiate additional share buyback schemes, and is expecting big things when it comes to the NAB dividend.
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ASX broker forecasts even more dividend hikes from NAB shares
Goldman has pencilled in a total of $1.66 in dividends per share for both FY2023 and FY2024. That implies that NAB's next final dividend (due this December) will come in at 83 cents per share, as will the following two payments.
If that does indeed come to pass, it would give the NAB share price a forward dividend yield of 6.25% all the way out to the end of FY2024 at the current share price.
That is a juicy yield by any measure. Not only does it well and truly trump NAB's larger rival Commonwealth Bank of Australia (ASX: CBA)'s current yield of 4.25%, it well exceeds any yield available from a savings account or term deposit right now (even without factoring that full franking). And that includes NAB's own products.
Let's hope Goldman is on the money here.
