Looking to secure a $1,000 passive income in 2024 by investing in National Australia Bank Ltd (ASX: NAB) shares?
We'll look at just how much I'd likely need to invest today to achieve that goal below.
But first, a little background on the recent performance of NAB shares.
Image source: Getty Images
Targeting NAB shares for passive income
On the passive income front, the S&P/ASX 200 Index (ASX: XJO) bank stock has paid two annual, fully franked dividends every year for more than a decade now, making it a very reliable income stock.
And the bank had a very profitable FY 2023.
For the 12 months ended 30 September, NAB reported an 8.8% year on year increase in cash earnings to $7.7 billion. And with statutory net profit up 7.6% to $7.4 billion, the board pleased passive income investors with a 7.6% increase in the final dividend, which came out to 84 cents a share.
This saw NAB shares deliver a total of $1.67 apiece in fully franked dividends in FY 2023, up from $1.51 per share the prior year.
At yesterday's closing price of $31.87, the big bank's stock trades on a trailing yield of 5.2%, with potential tax benefits from those franking credits.
Now, to the maths…
How many shares do I need to buy for a $1,000 passive income?
There are two general metrics we can use here to give us a good idea of how many NAB shares will deliver that $1,000 passive income in 2024.
First, there's the trailing yield, which we calculated above. This is backward-looking but based on hard data.
Second are forecast yields. These are forward looking, but based on analysts' best guesses of what the coming year will bring.
As for the forecast yield, CommSec forecasts NAB shares will pay out a total of $1.68 in dividends in the year ahead.
Goldman Sachs is a bit more cautious, forecasting passive income investors will receive $1.62 a share.
With those figures in mind, I'll stick with the trailing yield here, which falls somewhat in the middle of the two forecasts.
So, if NAB shares deliver $1.67 in dividends in 2024, I'd need to buy 599 shares today to secure my $1,000 in passive income.
At yesterday's closing price of $31.84 a share, that means I'd need to invest $19,072 now to aim for that goal.
And, of course, I'll be hoping to see the NAB share price outperform in 2024 as well.
