National Australia Bank Ltd (ASX: NAB) shares have pulled back from their highs, and I think the lower price has made the bank a more attractive investment.
The NAB share price is currently around $37.51. At that level, I think investors are getting a reasonable valuation, a good dividend yield, and exposure to one of Australia's strongest banking franchises.
Here are three reasons I would buy NAB shares now.
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The valuation looks reasonable
The first reason is 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, that puts the bank on a price-to-earnings ratio of around 15.4 times FY26 earnings and 14.8 times FY27 earnings.
I would not call that incredibly cheap, but it does look like reasonable value for one of Australia's major banks.
Bank shares have faced pressure as investors weigh higher interest rates, housing market uncertainty, credit quality, and competition. Those risks are worth taking seriously. But NAB remains a large, profitable business with a major role in Australian banking.
At this price, I think the valuation is much easier to justify than it was when the share price was closer to its highs.
The dividend yield is attractive
The second reason is 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 roughly 4.5% and 4.6%.
That is a solid starting yield, in my view, particularly for investors looking for passive income from ASX shares.
A $10,000 investment at around $37.51 per share would buy about 267 shares. Based on the forecast FY26 dividend of $1.70 per share, that investment could generate roughly $453 in annual dividends. Based on the FY27 forecast dividend of $1.72 per share, the income would be around $459.
That is before tax and any franking credits.
Dividends are never guaranteed, and banks can adjust payouts if conditions change. But I think NAB's forecast income looks attractive, especially when combined with the possibility of capital growth over time.
The business banking exposure is useful
The third reason is NAB's position in business banking.
Australia's major banks all have large mortgage books, but NAB has long had a strong reputation in business banking. I think that gives it a key point of difference.
Businesses need loans, deposits, transaction accounts, payment services, working capital support, and relationships with bankers who understand their operations. That creates a large pool of customers that can be valuable over many years.
This does not make NAB immune from an economic slowdown. If business confidence weakens or bad debts rise, earnings could come under pressure.
But over the long term, I like banks that are deeply connected to the real economy. NAB has scale, brand strength, customer relationships, and a large deposit base. Those qualities can help it keep generating profits and supporting dividends through different parts of the cycle.
Foolish takeaway
I think NAB shares look attractive at current levels.
The valuation appears reasonable on consensus earnings forecasts, the forward dividend yield is in the mid-4% range, and the bank has a strong position in Australian business banking.
There are still risks from the economy, competition, bad debts, and regulation. But at around $37.51, I think the balance of income, value, and long-term business quality makes NAB shares worth buying now.
