Own NAB shares? You just got a 44% return in FY24

NAB shot the lights out in FY24. Will FY25 be different?

| More on:
A woman wearing a flowing red dress, poses dramatically on a beach with the sea in the background.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Normally, the phrases '40% return' and 'bank shares' aren't uttered in the same sentence. ASX bank shares like National Australia Bank Ltd (ASX: NAB) are known for many things.

Fat, fully franked, market-leading dividends would be the obvious choice. Stable, mature business models and multi-decade presences on the ASX could also be thrown around.

But 40% returns in 12-month periods? That's certainly a new one.

Yet that's exactly what NAB shares have delivered for their investors over the financial year just gone. Yep, NAB shares rose by a whopping 35.6% over the 2024 financial year.

Want proof? Well, NAB shares started FY24 at $26.37 each. But by the time trading wrapped up last Friday, those same shares closed at $36.23. That's a capital gain of 37.39% alone.

If you want visual proof, just check out the graph below:

But then we have to factor in NAB's hefty dividend payments as well. Over the financial year that's just passed us by, NAB doled out two fully franked dividend payments. As is the bank's typical habit.

Last July saw an interim dividend worth 83 cents per share paid out. Then we had December's final dividend, worth 84 cents per share.

Together, this $1.67 in dividends per share would have resulted in investors enjoying an additional yield of 6.33% over FY24, going off the bank's FY24 starting price. So all up, investors have bagged a massive 43.7% in total gains from NAB shares last financial year.

What about NAB shares in FY25?

So NAB has had a phenomenal FY24. But what about the now-current financial year? Can investors expect another 40%-plus windfall from their NAB shares?

Unfortunately, it doesn't look good, at least according to some ASX experts.

Last month, my Fool colleague Tristan covered the views of ASX broker UBS. UBS did note that it expects NAB to grow profits over both FY24 and FY25, which bodes well for NAB's dividend payments. However, that wasn't enough for UBS to hold back in issuing a 'sell' rating on the NAB share price.

The broker simply sees NAB as "fully valued" at its current pricing, and gives the bank a 12-month share price target of $30. If realised, that would see investors take a 16% haircut from where the shares are today.

Just over a month ago, we also looked at the view of another broker in Goldman Sachs. Goldman voiced similar concerns, noting that NAB "trades well above its 15-year average" and that all ASX banks are "close to record expensive".

Goldman gave NAB shares a neutral rating at the time, with a share price target of $34.04.

So it seems most ASX experts aren't liking what they see with NAB shares at the current price. That's certainly something for investors to keep in mind after such a bumper FY24.

Motley Fool contributor Sebastian Bowen has positions in National Australia Bank. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Bank Shares

A young bank customer wearing a yellow jumper smiles as she checks her bank balance on her phone.
Bank Shares

Research shows winners keep on winning. Should you stick to CBA shares?

The verdict is out, but data says winners can keep on winning.

Read more »

Bank building with the word bank in gold.
Bank Shares

Why are ASX 200 bank shares REALLY surging in 2024?

Was it due to fundamentals, or purely sentiment?

Read more »

An unhappy man in a suit sits at his desk with his arms crossed staring at his laptop screen as the PointsBet share price falls
Bank Shares

Westpac share price dips despite APRA cutting risk capital add-on

Westpac shares are down, along with other ASX 200 bank stocks, despite good news from APRA.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Bank Shares

I predict this ASX bank stock to be the next in line to pop

I rate this ASX bank share as the best opportunity in the industry.

Read more »

Woman and man calculating a dividend yield.
Opinions

Would I be crazy to buy CBA shares now at over $132?

CBA shares have defied a host of bearish analysts to soar 29% in 12 months. Now what?

Read more »

Good news has these businesspeople cheering for joy, partying in a board room.
Bank Shares

2 uniquely Australian reasons why ASX 200 bank shares are outperforming global peers

Three of the Big Four ASX 200 bank shares hit new price milestones today.

Read more »

A mature-aged couple high-five each other as they celebrate a financial win and early retirement
Bank Shares

ANZ shares strike 7-year high, is it too late to buy?

Should investors view ANZ shares as an opportunity?

Read more »

A man thinks very carefully about his money and investments.
Bank Shares

BOQ share price rises amid rumoured takeover interest

Could another major move in the banking sector be on the cards?

Read more »