National Australia Bank Ltd (ASX: NAB) shares have fallen a long way from their highs.
The NAB share price is currently trading around $37.45, down from a 52-week high of $49.45 and hovering above its 52-week low of $35.48.
For investors focused on passive income, I think this means NAB is worth a close look.
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The valuation looks reasonable
The first thing that stands out to me is the valuation.
According to CommSec, consensus estimates suggest NAB could generate earnings per share of $2.43 in FY26 and $2.53 in FY27.
Based on the current share price of around $37.45, that puts the bank on a price-to-earnings ratio of about 15.4 times FY26 earnings and 14.8 times FY27 earnings.
That does not make NAB unbelievably cheap. But I think it looks like good value for one of Australia's major banks.
Banks are going through a tougher period. Higher interest rates have put pressure on borrowers, competition remains strong, and investors are watching the housing market closely. But NAB still has scale, a major deposit base, strong customer relationships, and a leading position in business banking.
For a passive income investor, I think those qualities are important. The dividend needs to be backed by a business that can keep producing profits across different economic conditions.
The yield is attractive
The second reason NAB stands out is of course passive income.
CommSec consensus estimates point to dividends per share of $1.70 in FY26 and $1.72 in FY27.
At the current share price, that implies forward dividend yields of around 4.5% and 4.6%, respectively.
That is a useful level of income, in my view. It is high enough to be meaningful, while still coming from one of the country's largest banks.
To put the numbers another way, a $10,000 investment at around $37.45 per share would buy approximately 267 NAB shares.
Based on the forecast FY26 dividend of $1.70 per share, that holding could generate about $454 in annual dividend income. Based on the FY27 forecast dividend of $1.72 per share, the income would be around $459.
That is before considering tax and any franking credits.
Of course, dividends are never guaranteed. Bank dividends depend on earnings, capital requirements, regulation, credit quality, and the broader economy. But the forecast yield does show why NAB may appeal to investors looking for passive income.
Why I'd consider buying NAB shares
I think the income case is stronger because NAB is not only a yield story.
The bank has a large role in Australian business lending, which gives it a different flavour to a purely mortgage-focused bank. Small and medium-sized businesses need credit, transaction accounts, payment services, deposits, and relationship banking as they grow and manage daily operations.
That creates a valuable customer base if NAB can keep serving it well.
The bank also gives investors exposure to the Australian economy. That can create volatility, especially when confidence is weaker, but it also means NAB can benefit if conditions improve over time.
Foolish takeaway
I think NAB shares look attractive for passive income investors at current levels.
The share price has pulled back meaningfully, the valuation looks reasonable on consensus earnings forecasts, and the forward dividend yield is around the mid-4% range.
There are risks, particularly around the economy, housing, bad debts, and banking competition. But I think NAB's business banking strength and scale make it a useful income share to consider.
For investors wanting ASX passive income with the possibility of capital gains over time, I think NAB shares are worth buying.
