Owning National Australia Bank Ltd (ASX: NAB) shares could be a rewarding investment for the year ahead (and beyond).
Investors may normally expect a good dividend from ASX bank shares, but there's more to the total shareholder return (TSR) than just dividends. Capital gains can be useful or even provide the majority of the return over a particular time period.
A year is a relatively short-term timeframe for investing, but that's usually the time frame analysts consider when they give their expectations for the share price – it's called a share price target.
Let's look at the forecast for both the NAB share price and dividend.
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Analyst projections for NAB shares
According to CMC Invest, there have been 10 ratings on the ASX bank share within the last 12 months. Of those, two were buys, four were holds, and four were sells.
Of those 10 analysts, the average price target is $36.90. At the time of writing, that implies a possible decline of around 7% over the next 12 months.
If someone had invested $10,000, the forecast decline could mean those NAB shares are only worth $9,300 in 12 months.
But don't forget there's also the forecast dividend. According to CommSec, the business could pay an annual dividend per share of $1.70 in FY26. While the dividend is projected to increase to $1.72 per share in FY27, I'll be conservative and stick with the lower $1.70 dividend per share estimate.
At the time of writing, that projection translates into a forecast dividend yield of 4.3%. The TSR figure doesn't usually include franking credits, so I won't include it for my calculations.
The projected payout could translate into a cash payout of close to $430. That would take the overall $10,000 investment to approximately $9,700. In other words, investors could see a net loss of 3%, or approximately $300, over the next 12 months.
Is this a good time to invest in the ASX bank share?
This is seemingly not a good time to invest. Analysts are suggesting the NAB share price is overvalued, and investors may see negative returns if the bank's valuation goes backwards.
Of course, a 12-month period isn't the right time frame to judge a business. Over a longer time period, the NAB share price could rise, and the TSR could be much more positive, with dividend payments adding additional returns each financial year.
With all of the above in mind, I think there are better ASX share opportunities out there with a $10,000 investment.
