National Australia Bank Ltd (ASX: NAB) shares have shown robust performance in 2024, outpacing the broader market with a 13% increase compared to the S&P/ASX 200 Index's (ASX: XJO) 2% rise.
Growth of a $5,000 Investment in NAB Shares
A $5,000 investment in this ASX financial share at the end of 2023, when the share price was $30.70, would have enabled the purchase of approximately 162 shares. With NAB's share price rising by 13% since then, the investment would now be valued at $5,634.36.
Potential Dividend Income
While dividend for the current year have not been paid yet, if NAB maintains its dividend payout similar to the previous year, investors could expect an annual dividend per share of $1.67. This translates to a cash dividend yield of 4.8% or a grossed-up dividend yield of 6.9%.
Projected Total Shareholder Return
If NAB's share price reaches $34.78 by the end of 2024, the total shareholder return, including dividends and capital growth, could be close to 18%, potentially outperforming the market.
Factors Driving NAB's Share Price
The recent uptick in NAB's share price could be attributed to various factors, including favorable economic conditions such as low unemployment rates and decreasing inflation. However, the FY24 first-quarter update from NAB presented mixed results. While it reported a statutory net profit after tax (NPAT) of $1.7 billion and cash earnings of $1.8 billion, representing a 16.9% year-over-year decline, concerns were raised regarding a slightly lower net interest margin (NIM) and increased arrears in Australian home lending.
Conclusion
In conclusion, NAB's strong performance in 2024 so far has provided investors with substantial returns. However, challenges such as competitive lending pressures and rising arrears pose risks to future performance. Investors should carefully monitor NAB's financial health and market conditions to make informed decisions regarding their investments in NAB shares.
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