By late afternoon trade on the ASX today, shares of Australia's largest business bank, National Australia Bank Ltd. (ASX: NAB), were trading 4.5% lower.
Despite falling more than 20% over the past six months, NAB shares plunged because they're now trading 'ex-dividend'. That means investors who held NAB shares overnight will be entitled to the upcoming 99-cents per share fully franked dividend.
However, it is a pity for investors who bought NAB stock for income anytime over the past year because shares are currently sitting at a 52-week low.
Is it time to buy in?
Investors may see the recent falls in NAB's share price as an opportunity to be savvy and pick up a discounted investment. However, there are some reasons to believe NAB — indeed all major bank stocks — could fall further from here, including:
- Increased regulatory oversight
- Slower growing credit markets
- Growing competition
- Surging bad debts; and
- A slowing property market
These are but some of the factors potentially afflicting the $75 billion bank's profitability over the next five years, and, in turn, its share price. Therefore, investors should demand a healthy margin of safety on their purchase price to ensure they afford themselves every possibility of outperforming the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) – before dividends.
Personally, I wouldn't buy NAB shares at today's prices.
