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National Australia Bank vs Coles Group shares: Which blue chip should I buy next for my SMSF?
If you're looking at National Australia Bank Ltd (ASX: NAB) shares versus Coles Group Ltd (ASX: COL) shares for your SMSF, you're not alone. Both are household-name blue chips on the ASX, known for reliable dividends, defensive business models, and roles as core holdings in many Australian portfolios. But which deserves a spot in your next SMSF purchase? Let's break down the fundamentals, dividend outlook, recent momentum, and relative value to help you decide.
The case for National Australia Bank
National Australia Bank, or NAB, is one of the 'big four' banks dominating Australian and New Zealand banking. Its mainstays are retail and business banking, plus some operations overseas. NAB's size and scale, with a strong local focus, give it a distinct position as a pillar of the Australian financial system.
Notable fundamentals jumping out include:
- Market cap: $120.18 billion, one of the biggest companies on the ASX
- P/E ratio: 19.63, on the lower side for a blue-chip, partly reflecting the lower-growth, higher-stability banking sector
- Dividend yield: 4.33%, fully franked at 100%, meaning those dividends can be particularly attractive for SMSFs seeking income with franking credits
NAB's earnings per share comes in at $2.00, with a dividend per share of $1.70, showing it's distributing a healthy portion of its profits. Year-to-date return is -5.22%, meaning the share price has drifted lower this year, but the dividend cushion gives some comfort. According to its most recent public description, NAB has built a dominant presence in local banking, serving millions of Australians and New Zealanders.
The case for Coles
Coles is Australia's second-largest supermarket operator, with a nationwide footprint spanning Coles Supermarkets, Coles Liquor, and an online offering. Famous for its weekly specials and focus on essential products, Coles is a true consumer staple — the sort of retailer that hums along no matter what the economy is doing.
A few highlights from the numbers:
- Market cap: $31.76 billion (significantly smaller than NAB, but still a titan in listed retail)
- P/E ratio: 29.19, higher than NAB's, reflecting different growth expectations for supermarket retail versus banking
- Dividend yield: 3.29%, also fully franked, making Coles appealing to income-seeking SMSFs
Coles delivers earnings per share of $0.812 and a dividend per share of $0.74 — again, a decent portion of profits returned to shareholders. Year-to-date, Coles shares are up 14.18%, outpacing much of the market. According to its latest company profile, Coles operates across groceries, liquor, and household goods, maintaining a huge retail presence and brand recognition.
Valuation comparison
Here's how NAB and Coles stack up on the key valuation and income stats:
| National Australia Bank | Coles | |
|---|---|---|
| Market Cap | $120.18b | $31.76b |
| P/E Ratio | 19.63 | 29.19 |
| Dividend Yield | 4.33% (100% franked) | 3.29% (100% franked) |
| Dividend per Share | $1.70 | $0.74 |
| Earnings per Share | $2.000 | $0.812 |
| Year to Date Return | -5.2% | 14.2% |
NAB currently offers a materially higher dividend yield than Coles and does so with full franking. The P/E ratio for NAB is noticeably lower — but keep in mind: banks and retailers tend to trade at different benchmarks, so comparing their P/E ratios should be done in context. Coles' higher P/E may price in its perceived stability and growth outlook in groceries, while NAB's lower multiple can reflect sector trends or short-term headwinds.
Recent share price momentum
Comparing recent share price performance up to 14 October 2026:
- National Australia Bank: Closed at $38.55, down 1.78% for the day, and -5.2% year-to-date. NAB's shares have seen some bouts of volatility lately, with a short-term downward drift this year.
- Coles Group: Closed at $23.63, down 0.30% for the day, but is up 14.2% year-to-date. Coles shares have been far more resilient in 2026, delivering strong positive momentum versus the banking giant.
Which is the better buy?
If I could only add one of these blue chips to my SMSF right now, my pick would be Coles. Here's why: Coles may be on a higher P/E multiple, but its share price has delivered stronger momentum all year. The retail staple is churning out reliable profits and still providing a solid, fully franked dividend — albeit at a slightly lower yield than NAB. The steady consumer staples business has shown real resilience, especially through periods of economic uncertainty.
Meanwhile, NAB's dividend yield edges out Coles and may appeal to income-focused SMSFs, particularly with those juicy franking credits. But the negative share price performance year-to-date — and sensitivity to interest rate cycles and regulatory shifts — gives me pause. Until NAB can demonstrate steadier share growth or less sector risk, I'd lean toward the proven strength and momentum of Coles as a solid core holding for a long-term SMSF strategy.
