Investors in National Bank Australia (ASX: NAB) shares have been reliably earning passive income from dividends for many years.
It’s been a tough year for the ASX bank share, however, with the NAB share price shedding 14.2% in the year to date. Nab shares closed the week trading at $25.79 yesterday.
So how much passive income would you receive if you invested $10,000 in this ASX big four bank share?
How much passive income could NAB deliver?
Let’s imagine you invested $10,000 in NAB at $25.79 per share, the bank’s closing price at the time of writing.
At this price, you would end up owning 387 NAB shares with $19.27 in pocket change left over.
Now let’s take a look at NAB’s dividend payments in the last year.
NAB paid a fully franked final dividend of 78 cents per share in November and recently announced an interim dividend of 83 cents per share to be paid in July.
This total of $1.61 per share represents a dividend yield of 6.2%. So with a $10,000 investment in NAB, you would receive about $620 worth of passive income over 12 months.
Will NAB shares keep paying this dividend?
Goldman Sachs analysts are tipping NAB to pay fully franked dividends of $1.66 per share in FY23 and FY24.
This represents a dividend yield of about 6.4%. If you invested $10,000 in NAB with this dividend yield at the current share price, you would receive a passive income of $640.
However, Goldman has a buy rating on NAB with a $30.69 price target. This implies an 18.9% upside for the company’s share price.
At this share price, the dividend yield for NAB shares would be lower, at 5.4%.
Goldman is positive on NAB’s exposure to commercial lending and predicts “volume momentum over the next 12 months as favouring commercial volumes over housing volumes”. Commenting on this outlook, the broker said:
NAB provides the best exposure to this thematic.
Share price snapshot
NAB shares have fallen 14.2% in the year to date and 11.6% in the last month.
NAB has a market capitalisation of about $80.95 billion based on the latest share price.
