National Australia Bank Ltd (NYSE:OTC:NABZY), one of Australia's largest lenders, declared a $0.27 per share dividend, scheduled for payment on December 22, with an ex-dividend date set for tomorrow. The bank, known for its significant presence in business and home loans, also operates UBank, a prominent digital-only banking brand in Australia.
The announcement comes as part of NAB's long-standing tradition of bi-annual dividend distributions dating back to 1989. Currently, the bank boasts a trailing dividend yield of 5.82% and a forward yield of 5.86%, suggesting shareholders might expect an uptick in dividend payouts in the coming year. Despite this positive outlook, the bank's annual dividend growth rate has been declining over the past decade, with a three-year average growth rate of 12.50% dipping to -5.70% over five years and further down to -4.80% over ten years. Consequently, the five-year yield on cost stands at approximately 4.34%.
However, the sustainability of these dividends is under scrutiny due to a payout ratio of 0.72 as of September 30, raising questions about the bank's ability to maintain its dividend payments without affecting its financial health. Despite a low profitability rank of 4 out of 10 and positive net income reports over the past decade, there are lingering concerns.
In terms of growth metrics, NAB has experienced an average annual revenue increase of about 5.70%, which falls short when compared to global peers. Additionally, the bank's three-year EPS growth rate averages at 25.80% per year—lagging behind approximately 16.64% of global competitors—and its five-year EBITDA growth rate is a modest 0.80%, underperforming around 75.17% of global competitors.
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