National Australia Bank Ltd (ASX: NAB) has long held the underdog status among Australia's largest banks – for good reason.
However, in light of recent developments, there are now some reasons to think NAB shares certainly deserve a spot on your watchlist.
- Dividend yield. It likely goes without saying, but NAB shares are forecast to yield a fully franked dividend of 6.42% over the coming year. That's despite the bank raising billions in extra capital over recent months. Grossed-up for franking credits, its dividend yield blows out to over 9.1%.
- Divestments. For years, NAB has struggled to keep pace with its peers in large part due to the distraction of its international assets. However, with the divestments of its UK subsidiary, Clydesdale, and Great Western Bancorp in the USA underway; better days could lay ahead.
- Management. Under the leadership of CEO Andrew Thorburn, the bank has made number of big changes, such as the divestment decisions above. Looking ahead, NAB is well capitalised to aggressively challenge its major peers in the property markets of Australia and New Zealand.
- Share price. NAB's share price has dropped by 23% from its 52-week high of $39.71.
Is NAB a buy?
NAB shares appear cheap using a simple price-earnings ratio. Indeed, when compared against its peers, it is the best value. However, I believe NAB shares are quite expensive in absolute terms given the bleaker economic outlook. Therefore, I'd hold off buying NAB shares at today's prices.
