NAB stock: Should you buy the 4.7% yield?

Do analysts think this banking giant is a buy for income investors?

| More on:
A man in a suit smiles at the yellow piggy bank he holds in his hand.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

National Australia Bank Ltd (ASX: NAB) is a popular stock for income investors.

The banking giant features in countless income portfolios and superannuation funds across the country.

And this is for good reason.

As with the rest of the big four banks, NAB stock traditionally provides investors with dividend yields that are comfortably ahead of the market average. And who doesn't love a good yield!

But should buy the bank's shares now? Let's see what analysts are saying.

Should you load up on NAB stock?

Firstly, it is worth highlighting that NAB's shares have been on a strong run recently.

At present on Thursday, they are up almost 1% to $34.10. This means that year to date, the banking giant's shares are up approximately 11%.

This doesn't really make now an opportune to invest according to analysts. In addition, it has reduced the potential dividend yield on offer with its shares.

In respect to its dividend, according to a note out of Goldman Sachs, its analysts are forecasting a 4.7% fully franked dividend yield in FY 2024, FY 2025, and FY 2026.

Whereas if you had invested at the end of 2023 when NAB stock was going for $30.70, you would be looking at dividend yields of just over 5.2% per annum through to FY 2026.

Nevertheless, a fully franked 4.7% dividend yield is still above average and better than what you will receive from term deposits. In addition, with interest rates likely to fall next year, the yields on offer from fixed income products are likely to fall, making this even more attractive.

But should you buy NAB?

Well, at present Goldman Sachs has a buy rating on the bank's shares. However, the NAB share price has now surpassed the broker's price target of $33.73.

In light of this, now may not be the best time to invest and income investors may be better off keeping their powder dry and waiting for a better entry point.

Especially given that none of the other major brokers are tipping the bank as a buy. In fact, analysts at Citi put sell ratings on all the big four banks earlier this week on valuation grounds.

The broker has a sell rating and a $28.00 price target on NAB's shares, which implies a potential downside of almost 18% from current levels.

Elsewhere, Morgans has a hold rating on the bank's shares. But its price target of $30.02 still suggests that they could decline by 12% over the next 12 months.

Should you invest $1,000 in Commonwealth Bank Of Australia right now?

Before you buy Commonwealth Bank Of Australia shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Commonwealth Bank Of Australia wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Dividend Investing

Ecstatic woman looking at her phone outside with her fist pumped.
Dividend Investing

Buy Woolworths and these ASX dividend shares

Analysts are tipping the supermarket giant and these shares as buys. But why?

Read more »

Man holding fifty Australian Dollar banknote in his hands, symbolising dividends, symbolising dividends.
Dividend Investing

This ASX 200 stock is planning to pay a 25% dividend yield this month

This stock is rewarding its shareholders handsomely. Here's what is happening.

Read more »

Middle age caucasian man smiling confident drinking coffee at home.
Dividend Investing

Buy these ASX dividend stocks to supercharge your passive income

Analysts believe that these buy-rated stocks will provide income investors with some great yields in the near term.

Read more »

Man holding out Australian dollar notes, symbolising dividends.
Dividend Investing

3 ASX shares yielding over 7% for your portfolio

Analysts are expecting big yields from these buy-rated shares in the near term.

Read more »

Hand of a woman carrying a bag of money, representing the concept of saving money or earning dividends.
Dividend Investing

1 ASX dividend stock down 27% I'd buy right now

This business is trading cheaply, in my view.

Read more »

Man holding a calculator with Australian dollar notes, symbolising dividends.
Dividend Investing

A 5% yield? Here's the dividend forecast for an ASX 200 powerhouse

Are the generous dividends growing or getting smaller? Let's find out.

Read more »

A male investor sits at his desk looking at his laptop screen holding his hand to his chin pondering whether to buy Macquarie shares
Dividend Investing

This 10% ASX dividend stock is my top pick for immediate income

This business offers a lot of what income investors are looking for.

Read more »

A happy construction worker or miner holds a fistful of Australian dollar notes.
Dividend Investing

Buy Rio Tinto and these ASX dividend shares in May

Analysts expect good yields from these buy-rated shares.

Read more »