I have many favourite ASX dividend stocks in my portfolio that pay me regular passive income. Some I have for their dividend growth potential, which I hope will result in monstrous cash flows for my portfolio one day. Others I have for reliable income that I can spend on more ASX shares today.
My favourite ASX dividend stock for the latter group is unequivocally National Australia Bank Ltd (ASX: NAB).
Most readers would be fairly familiar with NAB. This ASX bank share is an entrenched member of the big four ASX bank shares. In fact, NAB today is the ASX’s second-largest bank share by market capitalisation, behind only Commonwealth Bank of Australia (ASX: CBA).
So why NAB? Well, for one, I think NAB is a company that, like the other members of the big four, is too big to fail. Its dominance of the Australian financial industry is entrenched by the ‘four pillars’ policy.
Several government regulatory agencies, including the Australian Prudential Regulatory Authority (APRA), keep a close eye on all Australian banks and put policies in place that limit risky behaviour. This gives me confidence that NAB is well-placed to prosper alongside the broader Australian economy for decades to come.
NAB’s management has also shown a lot of competence in my view over the past few years. Since taking the helm at NAB back in 2019, CEO Ross McEwan has navigated the pandemic and its aftermath with aplomb. This has helped to propel this ASX dividend stock to the comfortable second place amongst the ASX banks that it occupies today.
But let’s talk about dividends and the income an investor can expect from NAB shares today.
Why NAB is my favourite ASX dividend stock for income right now
Over the past 12 months, NAB shares have paid out two fully-franked dividends. Last month’s interim dividend of 83 cents per share was a pleasing increase over last year’s equivalent payout of 73 cents per share. Ditto with NAB’s December final dividend last year. This came in at 78 cents, a happy rise over the 67 cents investors bagged back in 2021.
Today, that annual total of $1.61 per share in dividends gives the NAB share price a trailing dividend yield of 5.71%, or 8.16% grossed-up with that full franking.
Using this yield as a benchmark, an investor with $10,000 in NAB shares today would have received $571 in dividend income over the past 12 months from this ASX dividend stock.
That’s arguably a pretty good start if you’d like dependable passive dividend income. But it could get even better.
As my Fool colleague covered last month, ASX broker Goldman Sachs reckons NAB will be able to dial up its dividends again over the coming 12 months. This broker has pencilled in a total of $1.66 in dividends per share from NAB over FY2023, FY2024 and FY2025.
If Goldman is on the money here, NAB shares would have a forward dividend yield of 5.89% today.
So it’s for all of these reasons that bank share NAB is my favourite ASX dividend stock to buy today for reliable passive income.
