Owning National Australia Bank Ltd (ASX: NAB) shares has been an excellent choice for passive income over the years and this is expected to continue for the foreseeable future year.
Shareholders can thank the large profits that NAB makes from lending to businesses and households for enabling the company to pay stable and growing dividends this decade following the pain of the COVID-impacted year of 2020.
Even during an economic downturn, NAB is likely to remain a solid dividend payer because consumers are likely to prioritise repaying their loans over discretionary spending.
Of course, dividends are not guaranteed to be paid, but NAB has scale benefits that most other ASX bank shares do not have.
Analysts think the bank is set to increase the payout in FY27.
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NAB dividend projection for FY27
According to the projection on Commsec, the business is forecast to pay an annual dividend per share of $1.70 in the 2026 financial year. That translates into a dividend yield of 4.1%, or 5.9% including the franking credits.
I want to give some insight into where the NAB dividend is expected to be in FY26 before we see what might happen in FY27.
According to the projection on Commsec, the business is projected to grow its annual dividend per share by 1.2% year-over-year in FY27 to $1.72 per NAB share.
At the time of writing, that potential payout translates into a dividend yield of 4.2%, or 6% including franking credits.
What would be needed for $1,000 of passive income?
The prospects seem good for shareholders to get a bigger payout in FY27, though that's not guaranteed, of course.
If an investor wants $1,000 of passive income from the ASX bank share in FY27, they'd need 582 NAB shares. At the time of writing, that would cost approximately $24,000.
If we include franking credits in the income goal, an investor would only need 407 NAB shares to generate $1,000 in annual dividends. At the time of writing, this would only cost $16,800.
Is this a good time to invest in NAB shares?
I'd say NAB is one of the best ASX bank shares around. However, at the time of writing, it has risen 16% since June 2026, so it's not as good value as it was.
According to CMC Invest, the average price target from nine recent analyst ratings is $38.56. That suggests those analysts collectively believe the stock could drop by more than 6% in the next year, so there could be even better opportunities at more attractive valuations.
