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National Australia Bank vs ANZ shares: which delivers better income?
When it comes to income investing, the big four banks are perennial favourites among Aussie shareholders. But which comes out ahead — National Australia Bank Ltd (ASX: NAB) or ANZ Group Holdings Ltd (ASX: ANZ)? Both are banking giants with substantial dividends and a long history of rewarding shareholders. Let's break down the data to see which looks better for those chasing income, and whether one offers a stronger investment case right now.
The case for NAB
National Australia Bank is a mainstay of Australia's financial landscape, providing a broad spectrum of banking and wealth management services. Its primary operations are in Australia and New Zealand, with a presence in Asia, UK, and the US. As one of the nation's 'big four' banks by market cap, NAB stands out for its scale and established reputation.
A few things jump out from the latest data:
- NAB boasts a market capitalisation of $120.37 billion, edging out ANZ and confirming its position as one of the country's very largest listed firms.
- Its dividend yield sits at 4.39%, with dividends fully franked at 100%.
- NAB's dividend history is both long and consistent, with recent annual dividends per share reaching $1.70, and all recent dividends fully franked — a feature especially appealing to Aussie investors seeking tax-effective income.
NAB bank runs a comprehensive range of services, but for me, it's the fully franked dividend paired with its massive scale that makes NAB a classic income pick.
The case for ANZ
ANZ Group Holdings is another pillar of Australia's banking sector, tracing its roots back to its 1969 ASX listing. The company claims, as of its latest public description, to serve over 8.5 million customers across nearly 30 markets. Like NAB, ANZ is globally diversified but with a strong anchor in Australia and New Zealand.
The metrics worth noting here include:
- ANZ's market cap came in just below NAB, at $115.06 billion, so it's a touch smaller but still an absolute giant.
- Its latest dividend yield is 4.36%, incredibly close to NAB.
- Dividends total $1.66 per share based on the most recent data, but unlike NAB, ANZ dividends are only partially franked (most recently at 75%), and the franking rate has been trending lower in recent payments.
While ANZ's payout and yield are virtually identical to NAB's, the lower franking means the after-tax income for Australian investors could be less attractive.
Valuation comparison
Both NAB and ANZ trade on seemingly similar valuations, but there are a couple of fine points of difference. Here's how they line up on the key income metrics:
| National Australia Bank | ANZ | |
|---|---|---|
| Market Cap | $120.37 billion | $115.06 billion |
| P/E Ratio | 19.36 | 19.28 |
| Dividend Yield | 4.39% | 4.36% |
| Dividend per Share | $1.70 | $1.66 |
| Franking | 100% | 75% |
| Earnings per Share | 2.000 | 1.973 |
NAB offers slightly higher dividends, fully franked, while ANZ's payout is almost the same dollar amount but only 75% franked, so you might not pocket quite as much after tax. Their P/E ratios and EPS numbers are effectively matched, suggesting the market prices them on similar expectations.
Recent share price performance
Comparing share price activity until 22 September:
- National Australia Bank closed at $38.61 on 22 Sep 2026. Its year to date return is -6.5%, reflecting a moderate downturn over 2026 so far.
- ANZ Group Holdings closed at $38.15 on 22 Sep 2026. Its year to date return is a positive 6.9%, showing genuine strength versus NAB over the same period.
It's clear that while both shares are trading at almost identical levels, ANZ has delivered solid positive momentum this year, whereas NAB has slipped backwards.
Which is the better buy?
If income is my main focus, I'd favour National Australia Bank over ANZ Group right now. Both offer near-identical headline dividend yields and similar payout levels, but NAB delivers 100% franking on its dividends — that's a real edge for Aussie shareholders chasing the maximum after-tax income. The consistent franking, especially compared to ANZ's recent trend of partial franking, makes a big difference come tax time.
On the other hand, ANZ is enjoying notably stronger share price momentum based on year-to-date returns. If total shareholder return (dividends plus price appreciation) is your true goal, ANZ's recent outperformance could tip the scales, at least in the short term.
But for me, the promise of fully franked, reliable dividends still matters more than a few months of price action. Provided NAB can keep up its track record, it's the better buy for an income investor in this big bank showdown.
