If I buy NAB shares today, what could my returns be in a year’s time?

The National Australia Bank Ltd (ASX: NAB) share price is heading in the right direction on Tuesday.

In afternoon trade, the banking giant’s shares are up 1.5% to $27.81.

However, NAB’s shares are still down 13% over the last 12 months and almost 18% from their 52-week high.

While this share price weakness is disappointing, it could have created a great buying opportunity for investors.

Could NAB shares generate strong returns?

Let’s take a look to see what might happen over the next 12 months if you were to invest $10,000 into NAB shares today.

According to a note out of Goldman Sachs, its analysts currently have a buy rating and $35.42 price target on the bank’s shares.

Based on the current NAB share price, this implies potential upside of approximately 27.3% for investors between now and this time next year.

If the bank’s shares were to rise in line with Goldman’s price target, it would turn a $10,000 investment into approximately $12,700. Not bad at all!

Don’t forget the dividends

Let’s not forget that NAB, like the rest of the big four, is a popular option for income investors thanks to its tendency to pay big fully franked dividends.

The good news is that Goldman Sachs expects this to be the case in the coming years.

Its analysts are forecasting the bank to increase its fully franked dividend from $1.51 per share in FY 2022 to $1.73 per share in FY 2023 and then $1.76 per share the following year. Based on where NAB’s shares are trading currently, Goldman’s estimates imply a generous 6.2% yield for investors.

That’s the equivalent of $620 of income from our $10,000 investment, which increases our total return to $13,320.

If Goldman is on the money with its recommendation, this will ultimately mean a very attractive 33.2% return on our original investment.

The post If I buy NAB shares today, what could my returns be in a year’s time? appeared first on The Motley Fool Australia.

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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 no position in any of the stocks mentioned. 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.

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