At the time of writing, the ASX bank shares are trading at $38.45. That's around 3% higher than a month ago, and 6% higher for the year-to-date.

For context, the S&P/ASX 200 Index (ASX: XJO) has fallen 4% over the past month, and is around 0.2% lower for the year-to-date.

ANZ is Australia's fourth-largest bank by market capitalisation. Its shares have outperformed the other three major banks over the past month and so far in 2026.

It's also the big-four bank of choice among brokers.

Market Index data shows the experts are split between a buy and hold rating on ANZ shares. But the $36.05 average target price implies a downside of around 6%, after the latest rally.

Brokers have a hold rating on National Australia Bank Ltd (ASX: NAB) shares, but rate Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corporation Ltd (ASX: WBC) as a sell or strong sell.

It's also one of the strongest passive income players.

What passive income does ANZ pay its shareholders?

As one of Australia's big four major banks, ANZ is generally considered to have stable earnings and predictable cash flow. 

While bank stocks are usually considered cyclical, ANZ's strong deposit base and diversified portfolio mean it is also relatively defensive in nature.

In mid-August, the bank reported cash profit of $1.9 billion, up 1% compared to the first-half quarterly average. While revenue was flat for the quarter, its net interest margin (NIM) edged up to 1.54% from 1.53%.

As of August, ANZ has achieved 73% of its gross cost-savings target of $800 million for FY26.

The bank's strong performance enables it to make reliable, regular dividend payments to shareholders. It does this every six months, in July and December. 

It also offers both a dividend reinvestment plan (DRP) and a bonus option plan (BOP) as alternatives to receiving cash dividends on ANZ ordinary shares.

ANZ's most recent dividend payment was an 83-cent per share interim dividend, franked at 75%, in July. 

The 83-cent dividend is the same payout that investors have received every six months since July 2024. However, the latest payout included an additional 5% franking credit (previously 70% or 65%).

Forecasts show that ANZ is expected to pay an annual dividend of $1.66 in FY26, and the same again in FY27. At the time of writing, that translates to a forward dividend yield of 4.3% for each year.

How many ANZ shares can I get with $10,000?

Using the $38.45 trading price at the time of writing, a $10,000 investment in ANZ shares would buy around 260 shares.

How much passive income can I earn from those shares in FY26 and FY27?

Assuming the bank pays the forecasted $1.66 dividend in FY26 and FY27, those 260 shares could earn around $431.60 in passive income each year.

The post If I invest $10,000 in ANZ shares, what passive income could I receive in FY27? appeared first on The Motley Fool Australia.

Some ASX bank stocks experienced a pullback over the past month, while others started trending higher. 

It looks like investors aren't sure what to make of rising inflation, higher interest rates, a weakening housing market, all against a backdrop of macroeconomic pressures and broad-based uncertainty.

What happened to the ASX 200 big four major banks in September?

Australia's banking sector is dominated by the big four banks: Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB), and ANZ Group Holdings Ltd (ASX: ANZ).  

Together, they make up around a quarter of the ASX 200 by market capitalisation. 

There wasn't any price sensitive news out of any of the big four banks in September, so share price fluctuations were due to shifts in investor sentiment.

At the close of the last day of the month, CBA shares were around 0.5% higher to $151.01 each. But the ASX 200 major bank's shares have dropped around 6% over the course of September. 

NAB shares also ended the month in the green, up slightly by around 0.1% for the day on Wednesday, at $39.15 a piece. NAB shares have been relatively stable over the past month, and ended around 1% higher than they started. 

ANZ shares, however, ended the last day of the month in the red. The shares fell around 0.5% to $38.31 on Wednesday afternoon. But over the past month, the bank stock has climbed around 3% higher.

Meanwhile, Westpac shares ended around 0.2% higher on Wednesday afternoon, at $35.07 each. Over the past month, the shares have risen around 1.5%.

What about the ASX 200 mid-tier banks?

It was a similar story among the ASX 200 mid-tier banks, too.

Bendigo and Adelaide Bank Ltd (ASX: BEN) closed around 0.5% higher on the last day of September, at $10.36 each. Over the month, the shares fell around 3%.

Bank of Queensland Ltd (ASX: BOQ) shares climbed slightly into the green, up around 0.2% to $6.61. They were also up around 1% over the course of September. 

While Macquarie Group Ltd (ASX: MQG) also tumbled around 0.5% on Wednesday, closing the month at $246.10 a piece. The bank shares were also down around 2% over the month.

Which ASX bank shares are a buy for October?

Macquarie shares were one of the poorest performing ASX bank shares in September. But it's still the only stock that brokers are bullish about going forward. Market Index data shows that the majority have a strong buy rating on Macquarie shares. The average $270.89 target price implies the shares have the potential to climb another 10% higher, at the time of writing.

Which ones have been rated as a sell?

The experts have had a strong sell rating on CBA shares for some time now. And there hasn't been a change in sentiment this month either. Market Index data shows the majority of brokers have a strong sell rating, and the $125.20 target price implies a downside of around 17%, at the time of writing. That's the largest forecasted downside of any of the ASX banks.

The experts also have a sell rating on Westpac shares. Market Index data shows the average $34.18 target price implies a downside of around 3%, at the time of writing.

Brokers are also bearish on the outlook for Bendigo and Adelaide Bank shares. Market Index data shows the majority have a sell rating, and the $10.06 average target price also implies a downside of around 3%.

And what shares do brokers rate as a hold?

The data also shows that the majority have a hold rating on NAB shares. The $39.88 average target price implies the shares have the potential to climb slightly, by around 2%, over the next 12 months.

It's a similar story for ANZ shares. Most brokers also have a hold stance on the major bank. But after a slightly stronger September, the $36.05 average target price now suggests the shares could fall by up to 6% over the next 12 months, at the time of writing.

BOQ shares are the last on the list. Again, the majority have a hold rating, and the $6.06 average target price implies a downside of around 8%, at the time of writing.

The post Are ASX 200 bank stocks a buy in October? appeared first on The Motley Fool Australia.

After climbing as high as 8,697 points shortly after the open, the benchmark has since slipped back.

The ASX 200 is currently up just 0.04% at around 8,682 points, leaving it pretty much where it started the day.

It's also a mixed session across the market, with 87 shares higher, 101 lower and 12 unchanged.

There are some big moves among individual shares, but investors also have one eye on this afternoon's interest rate decision.

That could make things a lot more interesting later today.

So, let's take a look at what's happening.

Tech shares steal the show

The S&P/ASX 200 Information Technology Index (ASX: XIJ) is one of the strongest areas of the market today, up 2.41%.

Megaport Ltd (ASX: MP1) shares are 12% higher after announcing three new AI infrastructure contracts worth a combined $978.6 million.

The company also upgraded its FY27 revenue guidance to between $720 million and $810 million.

Codan Ltd (ASX: CDA) shares have also jumped around 18% to $60.84 after upgrading its earnings guidance.

Elsewhere, South32 Ltd (ASX: S32) shares are up 3.18% to $5.04, while QBE Insurance Group Ltd (ASX: QBE) has climbed 1.43% to $23.44.

However, those gains are being offset by weakness elsewhere in the market.

Banks weigh on the market

The major banks aren't offering much support today, with all four trading lower.

Commonwealth Bank of Australia (ASX: CBA) shares are down 0.67% to $151.45, and National Australia Bank Ltd (ASX: NAB) has slipped 0.61% to $41.70.

Westpac Banking Corp (ASX: WBC) shares are down 0.50% to $38.15, with ANZ Group Holdings Ltd (ASX: ANZ) having fallen 0.62% to $37.04.

Wall Street falls overnight

Our share market also received a weak lead from Wall Street overnight.

The Dow Jones Industrial Average (DJX: .DJI) fell 0.67%, while the S&P 500 (SP: .INX) dropped 0.77%.

The Nasdaq Composite (NASDAQ: .IXIC) fell the most, down 0.92%.

US Treasury yields also moved higher, with the 10-year yield climbing above 5.2%.

All eyes on the RBA

The big event is still to come, with the RBA set to announce its latest interest rate decision at 2:30pm AEST.

The cash rate currently stands at 4.35% after three increases in 2026, with another rise widely expected today.

Investors also received new household spending figures this morning.

Spending was flat in August after climbing 1.1% in July, while annual growth remained at 6.8%.

The RBA decision, and what Governor Michele Bullock says afterwards, could have a much bigger say in where the market finishes today.

The post ASX 200 holds steady as investors brace for a big afternoon appeared first on The Motley Fool Australia.

With NAB shares trading around $39.13, I think there is a solid case for adding them to a portfolio next month. Here is why.

A solid earnings outlook

I would not expect explosive growth from NAB. Consensus forecasts point to earnings per share (EPS) of $2.38 in FY26, rising to $2.54 in FY27.

At today's share price, that values NAB on a PE ratio of around 16 times FY26 earnings and just over 15 times FY27 earnings.

I think that is a reasonable price for one of Australia's largest banks, particularly given NAB's strong position in business banking.

That part of the company is one of the main reasons I like it. Australian businesses need banking services across lending, payments, deposits, and other areas, giving NAB another avenue for earnings beyond the highly competitive mortgage market.

What could higher interest rates mean?

The prospect of further Reserve Bank of Australia interest rate rises complicates the outlook somewhat.

Higher rates can be positive for banks if they allow lending rates to rise in a way that supports net interest margins, which measure the difference between what a bank earns on loans and pays for its funding.

But there is another side to that equation.

Higher borrowing costs put more pressure on households and businesses. If rates climb too far, credit growth could slow, customers may become more cautious about taking on debt, and bad debts could eventually increase.

Competition also plays a role. Banks cannot simply assume that every increase in the cash rate will translate into better margins when they are competing for both borrowers and deposits.

For me, that means another RBA rate rise would not automatically strengthen the NAB investment case.

I would instead focus on how the bank manages margins, credit quality, and lending growth through the changing rate environment.

The dividend adds to the case

Passive income is another reason investors may be interested in NAB shares.

Consensus forecasts point to fully franked dividends of $1.70 per share in FY26 and $1.72 in FY27.

At $39.13, the FY26 forecast represents a dividend yield of around 4.3%, before including the benefit of franking credits.

The expected increase in FY27 is small, but the important point for me is that analysts currently expect the dividend to remain well supported with manageable payout ratios of around 71% and 68%.

Foolish takeaway

NAB is not the sort of share I would buy expecting spectacular growth over the next 12 months.

What I see instead is a major bank with a strong business banking franchise, a reasonable forward valuation, and a fully franked dividend that could provide an attractive income stream.

Interest rates could make the next year a little more complicated, particularly if borrowers come under greater pressure. But at around $39, I think there is enough in NAB's favour for me to be comfortable adding the shares in October and holding them for the long term.

The post Why I'd buy NAB shares in October appeared first on The Motley Fool Australia.

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:

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.

The post NAB vs ANZ: Which big four bank is the better passive income stock? appeared first on The Motley Fool Australia.

Banks like NAB have can deliver a solid dividend yield thanks to its fairly low price/earnings (P/E) ratio and generous dividend payout ratio.

NAB's profit is fairly consistent due to the nature of banking. Borrowers repay their loans every month, providing NAB with resilient cash flow.

Let's take a look at what experts expect for NAB's dividend in the coming years.

FY26

We're close to the end of the 2026 financial year for NAB, which ends in September 2026. The last we heard from the ASX bank share was the three months to 30 June 2026.

Its FY26 third quarter saw the bank generate statutory net profit after tax (NPAT) of $1.81 billion, an increase of 32% compared to the quarterly average of the FY26 first half.

Revenue grew by 2% compared to the first-half FY26 quarterly average, and 5% year-over-year. Cash earnings of $1.83 billion were up 4% year-over-year, and 2% compared to the FY26 first-half quarterly average.

It's not a lot of growth, but it's growth nonetheless at a difficult time.

Its credit impairment charges came to $299 million. Within that, its collective provision charges were $119 million, driven by business lending volume growth and a deterioration in performing book asset quality. It's something to keep an eye on amid higher interest rates and potential stress related to the Middle East conflict.

According to the projection on CMC Invest, NAB could pay an annual dividend per NAB share of $1.70, which would be the same as FY25.

FY27

The 2027 financial year could see an improvement in the bank's financials, according to the earnings and dividend projections. Forecasts are not guaranteed to happen of course, but I think any growth during the current period would be impressive.

According to the projection on CMC Invest, the ASX bank share is forecast to slightly increase its annual payout to $1.705 per NAB share.

FY28

The final year of this series of projections could be the best of all for shareholders of National Australia Bank.

The forecast on CMC Invest suggests that the business could accelerate the growth of its dividend, taking the annual payout to $1.73 per NAB share.

At that potential level, the ASX bank share could deliver a grossed-up dividend yield of 6.4%, including franking credits, at the time of writing.

The post Here's the dividend forecast out to 2028 for NAB shares appeared first on The Motley Fool Australia.

SMSF investors have more flexibility than other superannuation investors about where to put their money. ASX shares have the biggest allocation, followed by owned property, cash and term deposits, managed funds, exchange-traded funds (ETFs), unlisted trusts, 'other', international shares and finally debt securities.

Let's see which ASX shares are the most popular within SMSF portfolios.

The most popular ASX shares

SMSF cloud accounting software provider Class recently released its 2026 annual benchmark report, which gave a lot of insights into the SMSF landscape. Class is owned by Hub24 Ltd (ASX: HUB).

At 30 June 2026, there were 12 ASX shares that were held in at least 20% of SMSF portfolios:

• BHP Group Ltd (ASX: BHP) – 46.6% of all SMSF portfolios
• Woodside Energy Group Ltd (ASX: WDS) – 37.2%
• National Australia Bank Ltd (ASX: NAB) – 34.4%
• Westpac Banking Corp (ASX: WBC) – 34.1%
• ANZ Group Holdings Ltd (ASX: ANZ) – 34.1%
• Commonwealth Bank of Australia (ASX: CBA) – 31.9%
• CSL Ltd (ASX: CSL) – 31.4%
• Telstra Group Ltd (ASX: TLS) – 31.4%
• Wesfarmers Ltd (ASX: WES) – 29.4%
• Macquarie Group Ltd (ASX: MQG) – 29.5%
• Woolworths Group Ltd (ASX: WOW) – 24.1%
• Rio Tinto Ltd (ASX: RIO) – 21.8%

It makes sense that these ASX shares have been chosen by SMSF investors. Almost all of them have a solid dividend yield. Passive income may be exactly what investors in retirement are looking for.

I think it's interesting that BHP and Woodside appear in the most portfolios. But it's also intriguing that NAB, Westpac and ANZ all feature in more portfolios than CBA. Commonwealth Bank also has the lowest dividend yield of the big four banks.

However, while they are in more portfolios, things look different when looking at which ASX shares have the most overall SMSF dollars invested in them.

According to Class data, order of most dollars allocated to ASX shares (with a weighting of more than 2%):

• CBA – 5.9%
• BHP – 5.5%
• Westpac – 3.6%
• NAB – 3.4%
• ANZ – 3.2%
• Wesfarmers – 3.2%
• Macquarie – 3.1%
• Telstra – 2%

ASX bank shares still have a very large place in SMSF portfolios, though BHP has significant SMSF dollars invested in it too.

What about exchange-traded funds (ETFs)?

ETFs are becoming increasingly popular investors as a way to gain exposure to certain sectors or geographies for a low cost.

According to the Class SMSF benchmark report, 35.5% of SMSFs now own at least one ETF, though they only account for a 7.2% allocation of overall SMSF dollars.

The ASX ETFs that are the most widely held include:

• Vanguard Australian Shares Index ETF (ASX: VAS)
• iShares S&P 500 ETF (ASX: IVV)
• VanEck MSCI International Quality ETF (ASX: QUAL)
• Vanguard Msci Index International Shares ETF (ASX: VGS)
• Vanguard All-World ex-US Shares Index ETF (ASX: VEU)
• Betashares Nasdaq 100 ETF (ASX: NDQ)

If SMSF investors use a mix of investments, they can build an ASX share portfolio that delivers strong returns and diversification.

The post Here are the most popular ASX share superannuation investments in SMSFs appeared first on The Motley Fool Australia.

The combination of large profits and fully franked dividends has made the banking sector an obvious place to look for passive income.

So, with NAB shares well below their recent highs, is it one of the best ASX dividend shares to buy?

Why I like NAB for income

One reason I like NAB shares is the company's strong position in business banking.

The bank has significant exposure to small and medium-sized businesses across Australia, giving it a slightly different earnings mix from some of its major rivals.

I think that is attractive over the long term. As Australian businesses grow, borrow, invest, and manage their finances, NAB has an opportunity to grow alongside them.

Of course, banking earnings can still be affected by interest rates, competition, bad debts, and economic conditions.

But NAB remains a highly profitable business, and that gives it the capacity to return a meaningful amount of cash to shareholders.

For an income investor, that is ultimately what I want to see.

What could the dividend look like?

The current dividend forecasts look good to me.

Consensus estimates point to fully franked dividends of $1.70 per share in FY26 and $1.72 per share in FY27.

With NAB shares trading around $38.47 on Wednesday, those forecasts translate into prospective dividend yields of approximately 4.4% and 4.5%, respectively.

Eligible Australian investors may also benefit from the attached franking credits.

Is the NAB share price attractive?

NAB shares are trading well below their 52-week high of $49.45 and are now closer to their 52-week low of $35.48.

Consensus forecasts suggest earnings per share of $2.38 in FY26, rising to $2.54 in FY27.

At today's price, that puts NAB on a PE ratio of roughly 16 times forecast FY26 earnings and 15 times FY27 earnings.

I think that looks reasonable for a profitable major bank that is expected to grow earnings while continuing to pay substantial dividends.

The lower share price also means investors buying today are getting a better prospective yield than they would have received near the 52-week high.

What would I watch?

Competition remains one of the main risks.

Australian banks compete aggressively for both loans and deposits, which can put pressure on margins.

A weaker economy could also lead to higher bad debts, particularly if households and businesses come under more financial pressure.

Those are risks I would keep an eye on, but they do not change my overall view at the current price.

Foolish takeaway

I still think NAB is one of the better ASX dividend shares to buy.

At around $38.47, the valuation looks reasonable to me, while forecast fully franked dividends offer a dividend yield of roughly 4.4% to 4.5%.

For investors looking for income from the banking sector, NAB would remain high on my list.

The post Is NAB one of the best ASX dividend shares to buy? appeared first on The Motley Fool Australia.

But when I can, I plan to invest $50,000 of my super balance into three distinct ASX exchange traded funds (ETFs).

I also plan to invest some of my superannuation into a diverse basket of ASX growth shares and ASX passive income stocks.

But I believe the below three ASX ETFs provide a simple means to invest $50,000 into a very diversified collection of quality global and Aussie companies.

So, which ETFs am I eyeing?

Three ASX ETFs I'd buy with $50,000 of superannuation

First up, and as an Australian, I'd invest part of that $50,000 in superannuation in the Vanguard Australian Shares Index ETF (ASX: VAS).

With a management fee of 0.07% per year, this ASX ETF gives you immediate exposure to the 300 companies listed on the S&P/ASX 300 Index (ASX: XKO). VAS seeks to track the return of the ASX 300 Index and provide both long-term capital growth and some passive income.

The ETF's top three holdings are BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA) and National Australia Bank Ltd (ASX: NAB) shares.

As at 31 August, Vanguard Australian Shares Index ETF has delivered a total five-year return (including reinvested dividends) of 44%. That equates to an annualised return of around 7.6%.

Which brings us to the second ASX ETF I'd invest part of my $50,000 of superannuation in, the Betashares Nasdaq 100 ETF (ASX: NDQ).

I believe the tremendous outperformance we've seen from the US tech giants, while it may retrace short term, will continue apace over the longer-term, fuelled by the AI revolution.

With an annual management fee of 0.48%, NDQ aims to track the performance of the Nasdaq 100 Index. In other words, the largest non-financial companies listed on the Nasdaq, most of which have direct connections to the new economy.

The ETF's largest holdings are Nvidia Corp (NASDAQ: NVDA), Apple Inc (NASDAQ: AAPL) and Microsoft Corp (NASDAQ: MSFT).

As at 18 September, over the past five years NDQ has returned an annualised gain of 14.2%.

And the third ASX ETF I'd buy with some of my $50,000 in superannuation is the Vanguard All-World ex-US Shares Index ETF (ASX: VEU).

This third investment, as you can likely tell from its name, will materially help diversify my retirement portfolio. And the management fee is a low 0.04% per year.

VEU offers exposure to some of the world's largest companies that are listed in major developed and emerging countries outside the United States.

Its top three holdings are Taiwan Semiconductor Manufacturing Co Ltd (TPE: 2330), Samsung Electronics Co Ltd (KRX: 005930) and SK Hynix Inc (KRX: 000660).

As at 31 August, the Vanguard All-World ex-US Shares Index ETF has delivered a total five-year return of 61.4%. That equates to an annualised return of approximately 10.0%.

Based on historical five-year returns, if I invest an equal portion of my $50,000 superannuation in each ASX ETF, I can expect an annual return of 10.6%.

The post Why I'd invest $50,000 of superannuation into these 3 top ASX ETFs appeared first on The Motley Fool Australia.

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.

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.

The post If I invest $5,000 in NAB shares, what passive income will I receive in FY27? appeared first on The Motley Fool Australia.

They also dominate the S&P/ASX 200 Index (ASX: XJO) in terms of market share. 

Combined, they make up almost a quarter of Australia's benchmark index. 

This means when the big four bank stocks underperform, they have a huge impact on many ASX ETFs that track the domestic market. 

This is exactly what has happened so far in 2026. 

Why have bank stocks underperformed this year?

At the time of writing, in 2026: 

• Commonwealth Bank of Australia (ASX: CBA) shares are down 5% 
• National Australia Bank Ltd (ASX: NAB) shares have fallen almost 9%
• Westpac Banking Corp (ASX: WBC) is down more than 10%
• ANZ Group Holdings Ltd (ASX: ANZ) have risen 4%. 

These disappointing results have heavily contributed to the underperformance of the broader ASX 200, which is essentially flat year to date. 

Several factors have contributed to these poor returns. 

Firstly, the big four bank stocks came into 2026 with stretched valuations after strong growth in the prior year. 

Additionally, sentiment has shifted to viewing high interest rates as poor for the housing market as mortgage growth deteriorates. 

The big four control more than 70% of Australia's mortgage market, so weaker housing activity hits the sector disproportionately. 

Home-loan applications have fallen roughly 12–20% across the majors, according to Reuters.

In short, the market is no longer paying the same premium for reliable bank earnings when it sees slower mortgage growth, intense lending competition and rising credit-risk provisions ahead.

Can they rise before 2027?

With three of the big four bank stocks losing ground in 2026, investors might be looking to buy the dip. 

The latest outlook from experts paints a mixed picture for the next 6-12 months. 

On the positive side, UBS recently reaffirmed its buy rating on Westpac shares with a 12-month target of $45.

With Westpac shares currently trading for just under $35 per share, this indicates almost 30% upside. 

It also offers a competitive yield across the big four. 

On ANZ shares, Citi has a buy rating with a $39.25 target. 

This indicates limited upside from its current price hovering around $38. 

CBA shares still appear overpriced according to Shaw and Partners' James Bills, who recently had a sell rating on Australia's largest bank. 

Finally, NAB is also receiving poor outlooks from brokers, with Catapult Wealth's Dylan Evans recently issuing a sell recommendation on the big four bank stock. 

The post Which big 4 bank stock will rise the most before the end of 2026? appeared first on The Motley Fool Australia.

At time of writing the ASX 200 is down 0.2%.

Trading for 92 cents apiece, Tabcorp shares are up 1.1% at this same time, while NAB shares are just in the green, up 0.1% at $38.51 each.

Taking a step back, however, both stocks have underperformed the 0.1% losses posted by benchmark index in 2026.

Year to date, NAB shares have slipped 9.2% while the Tabcorp share price is down 8.1% this calendar year.

Although that's not including the dividends both companies pay. Tabcorp trades on a 3.2% unfranked trailing dividend yield, while NAB trades on a fully franked 4.4% trailing dividend yield.

But, dividends or not, Catapult Wealth's Dylan Evans expects that growing headwinds leading into 2027 put both of these popular ASX 200 stocks on the sell list (courtesy of The Bull).

Here's why.

Time to exit NAB shares?

Evans noted NAB's relatively strong Q3 performance.

"Revenue grew by 2 per cent in the third quarter of fiscal year 2026 when compared to the first half quarterly average. Cash earnings also increased by 2 per cent," he said.

But the growth may not be sustainable in the coming quarters.

"In our view, the broader banking sector is facing several headwinds," Evans added.

Summarising his sell recommendation on NAB shares, he said:

The Federal government announced changes to capital gains tax and negative gearing in the May Budget. Investment loan applications have slowed amid a cost of living crisis. While the NAB business is well managed and the balance sheet is solid, it's difficult to identify any significant growth on the horizon.

Investors may want to consider taking some profits and explore superior earnings growth opportunities elsewhere.

Should you sell Tabcorp shares today?

Atop his bearish assessment for the outlook of NAB shares, Evans also issued a sell recommendation on Tabcorp shares.

"Tabcorp is the largest multi-channel wagering brand in Australia," he said.

Looking at Tabcorp's FY 2026 results, Evans said:

The company generated group revenue of $2.636 billion in full year 2026, up 0.8 per cent on the prior corresponding period. Group EBITDA [earnings before interest, taxes, depreciation and amortisation] of $431.7 million was up 10.3 per cent.

But, as with NAB, Tabcorp could be facing some mounting headwinds.

Commenting on his sell recommendation, Evans said:

In our view, a major challenge for Tabcorp is the highly competitive gambling industry and the underlying trend towards digital wagering amid the risk of potentially tighter regulations. The company expects domestic wagering turnover growth in fiscal year 2027 to be broadly consistent with fiscal year 2026, excluding the FIFA World Cup.

The shares have fallen from $1.17 on May 1 to trade at 90 cents on September 17. Other stocks appeal more at this stage of the cycle.

The post Sell alert! Why this expert is calling time on Tabcorp and NAB shares appeared first on The Motley Fool Australia.

On The Bull this week, Dylan Evans from Catapult Wealth explains his ratings on three ASX 200 shares.

Let's take a look.  

Coles Group Ltd (ASX: COL)

The Coles share price closed at $23.12 on Friday, down 0.47% for the week.  

Evans has a buy rating on this ASX 200 consumer staples share. 

He said: 

The supermarket industry structure remains favourable, with Coles and competitor Woolworths Group Ltd (ASX: WOW) dominating market share.

Coles posted group sales revenue of $45.580 billion in full year 2026, up 2.8 per cent on the prior corresponding period. Excluding significant items, group earnings before interest and tax of $2.322 billion was up 9.9 per cent.

Supermarket eCommerce sales was a highlight, growing 26.4 per cent.

Coles offers a reliable dividend yield, backed by defensive earnings.

Catalysts for growth include online expansion, population growth and supply chain automation.

CSL Ltd (ASX: CSL)

The CSL share price closed at $175.59 on Friday, up 5.08% for the week.  

Evans has a hold rating on this ASX 200 healthcare share. 

He commented: 

The CSL share price has partially recovered after the company posted a brighter outlook at its 2026 full year results.

A promising sign was profit growth guidance in full year 2027, driven by the core blood plasma business. This guidance should provide the market with confidence about CSL's brighter future after a difficult period.

There's potential value in the stock, particularly if CSL achieves guidance and growth recovers.

National Australia Bank (ASX: NAB)

The NAB share price closed at $38.47 on Friday, down 0.65% for the week.  

Evans has a sell rating on this ASX 200 bank share. 

He said: 

Revenue grew by 2 per cent in the third quarter of fiscal year 2026 when compared to the first half quarterly average. Cash earnings also increased by 2 per cent.

In our view, the broader banking sector is facing several headwinds. The Federal Government announced changes to capital gains tax and negative gearing in the May Budget. Investment loan applications have slowed amid a cost of living crisis.

While the NAB business is well managed and the balance sheet is solid, it's difficult to identify any significant growth on the horizon.

Investors may want to consider taking some profits and explore superior earnings growth opportunities elsewhere.

The post Buy, hold, sell: Coles, NAB, CSL shares appeared first on The Motley Fool Australia.

Here are two ASX 200 shares they are tipping as buys and one share that they think is a sell:

Coles Group Ltd (ASX: COL)

The team at Catapult Wealth is positive on supermarket giant Coles. 

It highlights the company's attractive and reliable dividend yield and defensive earnings as reasons to buy. It said:

The supermarket industry structure remains favourable, with Coles and competitor Woolworths dominating market share. Coles posted group sales revenue of $45.580 billion in full year 2026, up 2.8 per cent on the prior corresponding period. Excluding significant items, group earnings before interest and tax of $2.322 billion was up 9.9 per cent. 

Supermarket eCommerce sales was a highlight, growing 26.4 per cent. Coles offers a reliable dividend yield, backed by defensive earnings. Catalysts for growth include online expansion, population growth and supply chain automation.

National Australia Bank Ltd (ASX: NAB)

Catapult Wealth isn't as positive on NAB and has named it as an ASX 200 share to sell this week.

It believes that growth will be challenging for the banking giant in the near term and thinks investors could get better value for money elsewhere in the market. Catapult Wealth explains:

Revenue grew by 2 per cent in the third quarter of fiscal year 2026 when compared to the first half quarterly average. Cash earnings also increased by 2 per cent. In our view, the broader banking sector is facing several headwinds. The Federal Government announced changes to capital gains tax and negative gearing in the May Budget. 

Investment loan applications have slowed amid a cost of living crisis. While the NAB business is well managed and the balance sheet is solid, it's difficult to identify any significant growth on the horizon. Investors may want to consider taking some profits and explore superior earnings growth opportunities elsewhere.

Netwealth Group Ltd (ASX: NWL)

The wealth management firm has named Netwealth as an ASX 200 share to buy.

It believes the investment management platform provider's shares are trading at an attractive level following recent weakness. Catapult Wealth said:

Netwealth operates a leading investment management platform used by financial advisers in Australia. The company's full year 2026 results continued to deliver strong growth, with the platform's funds under administration increasing 20.3 per cent to $135.7 billion and earnings per share growing 16 per cent to 55.2 cents. 

Despite these strong results, the share price has fallen significantly, most likely and partially in response to a compensation payout of about $101 million to members in the collapsed First Guardian Master Fund. Share price weakness presents an opportunity, as Netwealth still holds a net cash position and is poised to generate strong revenue growth moving forward.

The post 2 ASX 200 shares to buy and 1 to sell now appeared first on The Motley Fool Australia.

And with shares in the S&P/ASX 200 Index (ASX: XJO) bank stock recently trading for $152.75 apiece, down 15.1% from their 6 August close, is CommBank stock now a good buy for passive income?

Let's have a look.

Should I buy CBA shares for passive income?

While we could look at the forward dividend yields for CBA, those are simply based on analysts' current best forecasts. Or guesses, if you will.

With the future inherently uncertain, we'll instead base our investment case on the FY 2026 dividends. Or trailing yields. Just keep in mind that future yields may be higher or lower depending on a number of company specific and macroeconomic factors.

As for FY 2026, CBA paid a fully franked interim dividend of $2.35 a share on 30 March.

When the bank released its FY 2026 results on 12 August, it reported a 7% increase in cash net profit after tax (NPAT) to $11 billion.

This saw management declare a fully franked dividend of $2.70 per share.

That brings the total FY 2026 dividends to $5.05 a share, up 4.1% from FY 2025 and representing a new all-time high passive income payout.

And at the recent CBA share price, it sees Australia's biggest bank trading at a fully franked trailing dividend yield of 3.3%.

So, how does the dividend yield from the other big four ASX 200 bank stocks compare?

How do the other ASX 200 bank stocks stack up?

While investors buying CBA shares today will receive materially higher future dividend yields than those who bought the stock in the first weeks of August, CBA's dividend yield still trails its three biggest rivals.

For example, at recent share prices, National Australia Bank Ltd (ASX: NAB) and ANZ Group Holdings Ltd (ASX: ANZ) shares both trade at dividend yields of 4.4%.

And Westpac Banking Corp (ASX: WBC) shares trade on a 4.5% fully franked trailing dividend yield.

What are analysts saying about CBA shares?

Despite the reliable passive income on offer, most analysts recommend steering away from CommBank stock at the moment. Many remain concerned the ASX 200 bank remains overvalued despite the past month's share price retrace.

Earlier this week, Shaw and Partners' James Bills issued a sell recommendation on CBA shares (courtesy of The Bull).

According to Bills:

In our view, the stock trades at a significant premium to domestic peers and on historical valuations.

While the bank maintains a high-quality franchise and strong market position, earnings growth is expected to remain modest amid competitive lending conditions and regulatory pressures.

Recent Federal government initiatives aimed at increasing housing supply and improving affordability is likely to lead to intensifying competition across the mortgage market and place pressure on lending margins.

Current valuations leave limited scope for further earnings driven upside. Investors may wish to take profits and re-deploy capital into opportunities offering stronger risk-adjusted return potential.

The post Down 15% and paying record dividends: Are CBA shares now a good buy for passive income? appeared first on The Motley Fool Australia.

Deciding between Telstra Group Ltd (ASX: TLS) and National Australia Bank Ltd (ASX: NAB) is a classic dilemma for Aussie investors. Both are household names, blue chips to their core, but they play in very different sandboxes: Telstra dominates telecommunications, while NAB is a financial giant. If you're weighing up Telstra vs NAB shares for your portfolio, there are a few big differences to consider – from their income potential and defensive qualities to their recent performances on the ASX.

The case for Telstra Group

Telstra is Australia's oldest and most prominent telco, now operating globally across 20 countries. Since its corporate revamp in 2022, Telstra has reorganised under four main arms: ServeCo, InfraCo Fixed, Amplitel, and Telstra International. At heart, though, it remains the backbone of Australia's mobile, broadband, and fixed-line communications.

Looking at the fundamentals, Telstra offers a market cap of $54.36 billion and a P/E ratio of 24.32, positioning it as a sizeable defensive play. Its current dividend yield stands at 4.34%, supported by franking of just over 90%, giving it decent appeal for income seekers – though that franking is a little less than fully franked. Year to date, Telstra shares have returned 3.70%, so it's actually in positive territory for 2026 so far.

Telstra's dividend track record shows reliability (with some years of special dividends thrown in), but the actual dividend per share of $0.21 is lower in absolute terms than NAB. Its earnings per share is $0.199, so profitability is modest but steady.

The case for National Australia Bank

NAB is one of Australia's big four banks, with roots across Australia, New Zealand, and select overseas markets. It's a stalwart of the financial sector, with its core business spanning personal and business banking, lending, and wealth management.

NAB's market cap dwarfs Telstra at $118.53 billion. Its P/E ratio is 19.11, which comes in lower than Telstra's, meaning NAB shares look cheaper by this measure. NAB's dividend yield is fractionally ahead at 4.45%, and crucially, its dividends remain fully franked – a key point for many Aussie investors seeking tax benefits from franking credits. The current dividend per share is $1.70, substantially higher in dollar terms than Telstra's, with a stronger earnings per share at $2.00.

The trade-off? NAB's year-to-date return is negative, sitting at -7.66% for 2026 so far. While it's built a solid reputation for consistency, the recent share price drift is worth noting.

Valuation comparison

Here's how the key metrics stack up side by side:

There are clear contrasts: NAB is larger, sports a higher fully franked dividend per share, and appears modestly cheaper on a P/E basis. Telstra is faring better for share price performance so far in 2026.

Recent share price performance

Telstra's shares have mostly ticked upwards in recent weeks. From $4.63 on 1 September 2026, TLS closed at $4.88 on 16 September, a gain of around 5.4% in just over a fortnight. Volatility has been low, and the overall trend is steady to mildly positive.

NAB shares, in contrast, have trended downwards. From $38.50 on 1 September 2026 to $38.02 on 16 September, that's a mild decline. NAB saw sharper sell-offs and higher day-to-day swings.

So for recent momentum, Telstra is comfortably ahead.

Which is the better buy?

If I were forced to pick between Telstra and NAB right now, my lean would be toward Telstra.

There are a few points that guide my thinking. NAB's fully franked, high-dollar dividends are undeniably attractive, especially for those seeking regular franking credit income. But Telstra is holding up far better in terms of recent share price growth and offers most of NAB's income appeal, with a still-solid 4.34% dividend yield and over 90% franking.

NAB shares do look cheaper on a P/E basis, and its much larger scale gives it some defensive strength. But banking sector pressures have dragged on its price, and year to date, NAB is negative, while Telstra is up.

Telstra's defensive telco business, clearer price momentum, and stable dividends make it my preferred option at today's prices. For me, Telstra edges past NAB for a balanced mix of growth and income right now.

The post Telstra vs NAB: Which ASX blue chip is the better buy? appeared first on The Motley Fool Australia.

Meanwhile, brokers have lifted their ratings on several ASX 200 shares this week. 

Let's review. 

CSL Ltd (ASX: CSL)

The CSL share price is $177.29, up 1.7% today.

Over the past month, this ASX 200 healthcare share has ripped 32%.

RBC Capital upgraded CSL shares to a buy rating on Tuesday.

The broker raised its 12-month price target substantially from $148 to $213.

This implies a potential 20% upside ahead.

National Australia Bank Ltd (ASX: NAB)

The NAB share price is $38.91, up 2.3% today.

Over the past month, this ASX 200 bank share has fallen 1%.

Citi upgraded NAB shares to a buy rating yesterday.

The broker increased its 12-month price target from $40 to $42.10.

This suggests a potential 8% upside ahead.

Lottery Corporation Ltd (ASX: TLC)

The Lottery Corporation share price is $4.86, up 0.7% today.

Over the past month, this ASX 200 consumer discretionary share has fallen 9%.

Morgans upgraded Lottery Corporation shares to a buy call today.

The broker reduced its 12-month price target from $5.60 to $5.40.

This implies a potential 11% upside ahead.

Ramsay Health Care Ltd (ASX: RHC)

The Ramsay Health Care share price is $55.06, up 0.4% today.

Over the past month, this ASX 200 healthcare share has risen 23%.

RBC Capital upgraded Ramsay Health Care shares to a buy call this week.

The broker increased its 12-month price target significantly from $52 to $68.

This indicates potential capital gains of 23% over the next year. 

Challenger Ltd (ASX: CGF)

The Challenger share price is $10.09, down 1.9% today.

Over the past month, this ASX 200 financial share has increased 4%.

UBS upgraded Challenger shares to a buy rating with a $11.50 price target.

This suggests a potential 14% upside ahead.

James Hardie Industries Plc (ASX: JHX)

The James Hardie share price is $37.38, up 0.2% today.

Over the past month, this ASX 200 materials share has fallen 15%.

Morgans upgraded James Hardie shares to an accumulate rating yesterday.

The broker shaved its 12-month price target from $45 to $43.

This suggests potential capital growth of 15% over the next year. 

Morgans said:

The positive company story and the growth trajectory are only partially offset by the tough macro, a 75bps rise in the 30-year mortgage rate over the past six months, and a peer multiple de-rate.

On this basis we upgrade to an Accumulate rating, whilst moderating our target price to A$43.00 (from A$45.00).

The post 6 ASX 200 shares boosted by brokers this week appeared first on The Motley Fool Australia.

All of the big four S&P/ASX 200 Index (ASX: XJO) bank stocks have a lengthy history of paying twice-yearly dividends. But there are some marked differences in both the yields you might expect, as well as the level of franking credits you may receive.

We'll look at the past year's share price moves and passive income payouts from CBA, NAB, ANZ, and Westpac shares below.

Just bear in mind that the yields you generally see quoted are trailing yields. Future yields may be higher or lower depending on a range of macroeconomic and company-specific factors.

With that in mind…

Tapping the ASX 200 banks for $5,000 in passive income

Kicking off with the biggest ASX 200 bank stock, CBA shares closed on Monday trading for $154.97 each. That sees the CBA share price down 8.3% over the last 12 months.

On the passive income front, CBA paid (or shortly will pay) two fully-franked dividends totalling $5.05 a share over the full year. CBA shares trade ex-dividend on 19 August. Eligible stockholders will receive the final dividend on 29 September.

At Monday's closing price, then, CBA trades on a fully-franked dividend yield of 3.3%.

Moving on, NAB shares closed yesterday at $38.72 each, putting the NAB share price down 11.6% over 12 months.

Over the time, NAB paid two fully-franked dividends totalling $1.70 a share. This sees NAB trading on a fully-franked dividend yield of 4.4%.

Next up, ANZ shares ended Monday trading for $37.54. Unlike the other big four ASX 200 bank stocks, ANZ shares have gained 13.8% over the past 12 months. Over this period, ANZ paid two dividends (franked at 70% and 75%), totalling $1.66 a share.

At Monday's close, ANZ shares trade on a partly franked dividend yield of 4.4%.

And last up, Westpac shares closed on Monday at $34.53 each, which sees the ASX bank stock down 10.9% over 12 months.

As for that passive income, Westpac paid two fully-franked dividends over the full year, totalling $1.54 a share. Westpac stock trades on a fully-franked 4.5% trailing dividend yield.

Which ASX 200 bank stock to buy?

While all four ASX 200 banks offer reliable dividend payments, Westpac is well ahead of CBA and edges out ANZ and NAB shares with the best yield. And it provides full franking credits.

For $5,000 a year in passive income, based on the trailing yield, you'd need to buy 3,247 Westpac shares today.

The post Westpac, ANZ, NAB or CBA shares? Which ASX bank stock should I buy for $5,000 a year in passive income? appeared first on The Motley Fool Australia.

Banks can be useful for passive income because they often offer a generous dividend payout ratio and trade at a relatively low price-to-earnings (P/E) ratio compared to other sectors.

NAB's dividend yield is typically materially higher than that of Commonwealth Bank of Australia (ASX: CBA), making NAB more appealing.

We're going to take a look at how big the NAB dividend could be in the coming period and what it would take to generate $9,000 of passive income.

NAB dividend projection

The ASX bank share has provided investors with a steady, slightly growing dividend over the last few years. The bank's consistent dividends have been pleasing, and analysts expect further solid payouts.

According to Commsec's projection, the business is expected to pay an annual dividend of $1.72 per share in FY27, a 1.2% year-over-year increase from FY26.

Dividend growth isn't guaranteed, but I think any growth is attractive in the current economic climate. Credit growth looks more challenging amid the Australian taxation changes and higher interest rates.

The biggest portion of NAB's earnings comes from lending to businesses. However, a weaker economic environment can be challenging for that segment.

If NAB does pay an annual dividend per share of $1.72 in FY27, that would be a dividend yield of 4.5% excluding franking credits and 6.3% including franking credits.

That's more passive income than what an Australian could get from a term deposit.

Let's take a look at what it would take to unlock $9,000 of annual passive income by owning NAB shares throughout FY27.

$9,000 passive income from the ASX bank shares

If investors are willing to own enough NAB shares, it could lead to significant passive income from the ASX bank share.

To generate $9,000 of passive income from NAB, if it pays $1.72 per share, an investor would need to own 5,233 NAB shares for that level of passive income cash.

However, if we also include franking credits in the income goal, an investor would need to own only 3,663 NAB shares.

NAB is certainly a potential option for dividends, but is the NAB share price actually an attractive opportunity?

According to the Commsec collation of analyst recommendations, there are currently 16 ratings. Four of them are a sell, nine of them are a hold and three are a buy rating.

Therefore, it seems like there are better ASX share opportunities out there worth choosing first.

The post How many NAB shares do I need to buy for $9,000 of passive income? appeared first on The Motley Fool Australia.

For investors looking at the major banks, NAB offers a combination of earnings, dividends, and exposure to Australian business banking.

At this price, I think the shares deserve a closer look.

Why I like NAB

One of the main reasons I am positive on NAB is its strong position in business banking.

The bank has deep relationships with Australian small and medium-sized businesses, giving it exposure to lending, deposits, payments, and other financial services.

I like that because it gives NAB another avenue for growth alongside its large consumer banking operations.

Australian banking is still highly competitive, particularly in mortgages, and I would not expect earnings to race higher every year.

But NAB has a sizeable customer base, strong market positions, and a business banking franchise that I think can continue supporting earnings over the long term.

What does the valuation look like?

The next question is whether investors are paying a sensible price.

According to CommSec, consensus estimates are for earnings per share of $2.38 in FY26, increasing to $2.54 in FY27.

At $38.48, that puts NAB on a PE ratio of approximately 16 times forecast FY26 earnings and around 15 times FY27 earnings.

I would not describe that as bargain territory. But I also do not think the valuation is excessive for a major Australian bank with a strong franchise and the prospect of modest earnings growth.

If NAB delivers something close to current expectations, I think today's price leaves room for reasonable capital growth over time.

The dividend remains a big attraction

For many investors, NAB is just as much an income stock as it is a capital growth investment.

That is an important part of the case for me.

CommSec's consensus forecasts point to fully franked dividends of $1.70 per share in FY26 and $1.72 in FY27.

At the current share price, those payments would represent dividend yields of approximately 4.4% and 4.5%, respectively, before taking any potential benefit from franking credits into account.

I think that is a solid level of income from a business I would also be comfortable owning for the long term.

What would make me cautious?

NAB still faces the same pressures as the rest of the banking sector.

Competition for customers can put pressure on margins, while weaker economic conditions could increase bad debts and slow credit growth.

The shares also would not look nearly as interesting if earnings failed to grow as expected.

Those are risks I would keep in mind, particularly after the strong performance Australian bank shares have delivered over recent years.

Foolish takeaway

At $38.48, I think the NAB share price is a buy.

The valuation looks reasonable rather than cheap, but I like the bank's business banking position and the prospect of earnings moving higher in FY27.

Add a fully franked prospective dividend yield of around 4.4% to 4.5%, and I think investors are being offered a good balance of income and potential capital growth at today's price.

The post Is the NAB share price a buy at $38.48? appeared first on The Motley Fool Australia.