National Australia Bank Ltd (ASX: NAB) shares have been in my personal ASX share portfolio for many years now. In fact, this ASX 200 bank stock is one of my oldest positions.
Since I first bought my NAB stock, I have been reasonably happy with its performance. I have received some healthy capital growth and a steady stream of meaningful dividend income. The full franking credits that NAB habitually attaches to its dividends have also been welcome.
By my calculations, I've gained around 40% from my NAB position since my first purchase, equating to a compounded annual growth rate of roughly 13.2% per annum. That includes both share price growth and dividends.
The past 12 months have actually been the most successful period of my NAB ownership. I have watched with satisfaction as my NAB shares have grown from just under $28 each back in October 2023 to the $38.64 they are valued at the time of writing. That's a gain worth more than 38%.
As such, I'm very happy with this investment, and I have no plans to sell these shares.
However, I also don't want to buy any more, despite my past success.
There are two reasons why.
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Why I'm not buying any more NAB shares
First up, whilst the rapid appreciation of this ASX 200 bank stock over the past 12 months has been welcome, I think it is a bit of an aberration.
If we look at NAB's long-term share price performance, it's very obvious that what has happened over the past 12 months has been highly unusual. We almost never see NAB gain anything like what it has over the past 12 months in such a short time span. That's with the exception of the recovery period following a stock market crash.
NAB investors are used to seeing this bank maintain a fairly steady valuation over many years rather than the stunning growth it has enjoyed recently. In fact, back in November of 2023, you could buy NAB for the same price as you could back in November of 2019. And at the beginning of 2013. Check it out for yourself below:
Whilst the recent gains for the NAB share price have been welcome in my portfolio, I also recognise that they are something of a historic anomaly. As such, it doesn't make much sense to me to buy more when prices are this high.
Rising share prices and falling dividend yields
Secondly, NAB's dividend yield is not what it used to be, at least for new share purchases. When I first bought NAB stock, I was fortunate enough to secure a dividend yield on my shares of more than 5%. Since NAB has upped its dividend since my first purchase, my yield-on-cost is now closer to 6.5%.
But NAB's recent share price gains have resulted in the bank trading on a trailing yield of just 4.35% today.
Given NAB's historical sluggishness when it comes to share price gains, I think it's important to secure a large dividend yield if you intend on holding this company as a long-term investment. That 4.35% doesn't quite cut it in my eyes.
So, although I'm planning on retaining NAB as a position in my portfolio, I'm not adding any more shares right now. Let's see what happens with the NAB share price over the rest of the year.
