ASX banking giants, such as National Australia Bank Ltd (ASX: NAB), are popular shares for passive-income investors seeking regular, reliable income.
What sets NAB apart from the other big four banks is its exposure to business lending and SME banking.
NAB also stands out because it earns a huge portion of its revenue directly from its core lending activities, including loans and deposits. This makes it less exposed to the volatility in Australia's residential mortgage market.
These attributes, combined with its exposure to business banking, allow it to generate a steady, diverse income stream. This is great news for investors seeking reliable passive income.
But what exactly could that passive income look like?
Lets investigate, using a $5,000 investment as an example.
Image source: Getty Images
What's the latest out of NAB shares?
NAB shares have faced a few headwinds this year, including overall lower investor sentiment, policy changes, and affordability concerns.
Higher-than-expected inflation data and renewed interest rate hike forecasts haven't helped matters either. A potentially weaker housing market means some investors are turning away from ASX bank shares.
NAB shares have managed to rebound from an annual low in early June, but they're still down around 9% year-to-date and are 11% lower than 12 months ago.
At the time of writing, NAB shares are $38.72 each.
But brokers are divided about the outlook for NAB shares over the next 12 months. TradingView data shows that half of analysts rate NAB shares a hold. The other half are split evenly between buy/strong buy and sell/strong sell ratings. But the $38.29 average target price now implies a potential 1% downside ahead.
How many NAB shares can I buy with $5,000?
At the time of writing, the $38.72 trading price means a $5,000 investment buys about 129 shares.
What annual dividend is the bank forecast to pay its shareholders in FY26?
NAB has been paying regular fully-franked dividends every six months to shareholders dating back to 2003.
NAB most recently paid its shareholders a fully franked interim dividend of 85 cents per share in July and is forecast to pay a final 85-cent dividend in December, bringing the total to $1.70 per share for FY26.
At the time of writing, that translates to a forward dividend yield of around 4.4% for the year.
What is NAB forecast to pay in FY27?
Going forward to FY27, the bank is expected to increase its dividend slightly to $1.72 per share. Based on the current share price of $38.72, that translates to a forward dividend yield of closer to 4.5% for FY27.
Ok, so what could I earn off a $5,000 investment in FY27?
If the banking giant pays the forecasted $1.72 dividend to shareholders in FY27, then a $5,000 investment (or 129 shares) will generate $221.88 in passive income, at the time of writing.
