In 2021, the passive income delivered by National Australia Bank Ltd (ASX: NAB) shares came roaring back following the 2020 pandemic-driven dividend declines.
By January of 2021, the NAB share price had also mostly recovered from the prior year's COVID crash.
If you were looking to tap the S&P/ASX 200 Index (ASX: XJO) bank stock for passive income in January 2021, you could have picked up shares for $23.50 apiece.
Meaning that with your $5,000 investment, you could have bought 212 NAB shares with enough cash left over for a fast food meal.
Now, in addition to receiving NAB's twice-yearly fully franked dividend payouts, which we'll look at below, you'd also have benefited from some sizeable share price gains.
As you can see in the chart above, the NAB share price closed on Friday at $38.17.
This means that solely from capital gains your 212 NAB shares bought in early 2021 for $5,000 would now be worth a tidy $8,092.04.
So, how about that passive income?
Tapping NAB shares for passive income
If you'd bought NAB shares in January 2021, you'd have been eligible to receive the past seven dividend payments.
You'd still need to wait a few months to be eligible for that eighth payout. The ASX 200 bank reports its FY 2024 results in November, with analysts forecasting a modest uptick in the final dividend from FY 2023.
As for the seven fully franked dividends that you would already have banked, they work out to a total income payout of $5.29 a share.
So, your 212 NAB shares will have already returned $1,121.48 in passive income.
Now, let's add that back into NAB's closing share price on Friday. This brings the accumulated value of the NAB shares you bought in early 2021 for $23.50 each to $43.46. Or a very handy gain of 84.3%, along with potential tax benefits from those franking credits.
What's been happening with the ASX 200 bank stock?
While we need to wait a few months to learn NAB's full-year results and the amount of passive income the big four bank will pay, investors reacted favourably to the company's third-quarter results, reported on 16 August, with shares closing the day up 1.5%.
NAB reported a statutory net profit for the three months of $1.9 billion, with cash earnings of $1.75 billion.
Pleasingly, the ASX 200 bank's net interest margin (NIM) was stable over the quarter.
Commenting on the quarterly results, NAB CEO Andrew Irvine said, "Liquidity and collective provision coverage are healthy. Capital remained strong over the quarter supporting the continuation of our on-market share buy-back."
This should also help support the outlook for reliable passive income from those NAB shares.
