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.
