Is it a good company at a reasonable price? This is a bank I do not own. Generally owning banks is good because they are dividend growth stocks as this one is. It has done well for its shareholders over time. I would think that now is not a good time to buy this bank if it is one you want to hold. The stock price is testing as relatively expensive.
I do not own this stock of National Bank of Canada (TSX-NA, OTC-NTIOF). I thought I should follow one of the smaller Canadian Banks. This seems like a good choice.
When I was updating my spreadsheet, I noticed that this bank is increasing their dividend growth. For example, the increase in dividends per year for the past 10 years is 8.6% per year and the dividend increases per year over the past 5 years is at 10.2% per year. This is always a good sign.
During the year, this bank bought Canadian Western Bank. See the Press Release.
If you had invested in this company in December 2015, for $1,007.75 you would have bought 26 shares at $40.31 per share. In December 2025, after 10 years you would have received $777.00 in dividends. The stock would be worth $4,315.25. Your total return would have been $5,092.25. This would be a total return of 19.66% per year with 15.66% from capital gain and 4.00% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $40.31 | $1,007.75 | 25 | 10 | $777.00 | $4,315.25 | $5,092.25 |
The current dividend yield is moderate with dividend growth moderate. The current dividend yield is moderate (2% to 4% ranges) at 2.94%. The 5, 10 and historical median dividend yields are all moderate at 3.71%, 4.01% and 3.85%. The dividends are growing at a moderate rate (8% to 14% ranges) at 10.2% per year over the past 5 years. The last dividend increase was in 2026 and it was for 5.08%. Note that this bank increases the dividends more than once a year. The dividend increase between 2024 and 2025 is 7.55%.
The Dividend Payout Ratios (DPR) are good. The DPR for 2025 for Earnings per Share (EPS) is good at 45% with 5 year coverage at 39%. The DPR for 2025 for Adjusted Earnings per Share (AEPS) is good at 40% with 5 year coverage at 38%. The DPR for 2025 for Cash Flow per Share (CFPS) is good at 38% with 5 year coverage at 36%. The DPR for 2025 for Free Cash Flow (FCF) is high at 51% with 5 year coverage at 71%. As with other stock lately, only WSJ is giving out a FCF value. Maybe people are losing interest in FCF.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 45.28% | 38.79% |
| AEPS | 40.43% | 37.75% |
| CFPS | 38.47% | 35.54% |
| FCF | 51.05% | 70.55% |
Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2025 is ok for banks at 6.98 and currently at 6.29. However, we need also to look at the Long Term Debt/Covering Assets Ratio for 2025 which is good at 0.78 and currently at 0.78 because this is a more important ratio for a financial. The Liquidity Ratio for 2025 is good at 8.47 and 8.47 currently. This is not an important ratio for banks. The Debt Ratio for 2025 is fine for a bank at 1.06 and 1.06 currently. The Leverage Ratio for 2025 is good at 4.5% and currently at 4.5%.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R A | 0.78 | 0.78 |
| Lg Term R | 6.98 | 6.29 |
| Intang/GW | 0.08 | 0.07 |
| Liquidity | 8.47 | 8.47 |
| Liq. + CF | 9.23 | 9.20 |
| Debt Ratio | 1.06 | 1.06 |
| Leverage Bk | 4.5% | 4.4% |
The Total Return per year is shown below for years of 5 to 39 to the end of 2025. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2020 | 5 | 10.17% | 22.91% | 19.23% | 3.68% |
| 2015 | 10 | 8.59% | 19.66% | 15.66% | 4.00% |
| 2010 | 15 | 9.07% | 14.83% | 11.38% | 3.45% |
| 2005 | 20 | 8.89% | 12.08% | 9.11% | 2.97% |
| 2000 | 25 | 10.57% | 14.33% | 10.80% | 3.53% |
| 1995 | 30 | 10.99% | 16.42% | 12.13% | 4.29% |
| 1990 | 35 | 7.20% | 15.68% | 11.36% | 4.32% |
| 1986 | 39 | 7.79% | 11.17% | 8.49% | 2.68% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 8.68, 10.36 and 11.64. The corresponding 10 year ratios are 8.66, 10.16 and 11.64. The corresponding historical ratios are 8.65, 9.96 and 11.64. The current ratio is 14.14 based on a stock price of $168.54 and EPS estimate for 2026 of $11.92. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 8.65, 10.65 and 11.76. The corresponding 10 year ratios are 8.55, 9.75 and 11.24. The corresponding historical ratios are 8.67, 10.19 and 11.49. The current ratio is 13.96 based on a stock price of $168.54 and EPS estimate for 2026 of $12.07. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $145.82. The 10-year low, median, and high median Price/Graham Price Ratios are 0.73, 0.87 and 0.99. The current ratio is 1.16 based on a stock price of $168.54. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Book Value per Share Ratio of 1.71. The current ratio is 2.15 based on Book Value of $30,619M, Book Value per Share of $78.30 and a stock price of $168.54. The current ratio is 26% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I also have a Book Value per Share estimate for 2026 of $83.79. This implies a ratio of 2.01 based on a stock price of $168.54 and a Book Value of $32,767M. This ratio is 17% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10-year median Price/Cash Flow per Share Ratio of 4.13. The current ratio is 14.22 based on Cash Flow for the last 12 months of $4,635M, Cash Flow per Share of $11.85 and a stock price of $168.54. The current ratio is 244% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 3.85%. The current dividend yield is 2.94% based on a stock price of $168.54 and dividends of $4.96. The current dividend yield is 24% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median dividend yield of 4.01%. The current dividend yield is 2.94% based on a stock price of $168.54 and dividends of $4.96. The current dividend yield is 28% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10-year median Price/Sales (Revenue) Ratio is 3.03. The current P/S Ratio is 4.39 based on Revenue estimate for 2026 of $15,020M, Revenue per Share of $38.41 and a stock price of $168.54. The current ratio is 45% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
Results of stock price testing is that the stock price is probably relatively expensive. The dividend yield testing shows this. It is confirmed by the P/S Ratio testing. All the rest of the testing, with the exception of the P/B Ratio test is showing that the stock price is relatively expensive.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (2), Hold (7), and Underperform (2). The consensus would be a Buy. The 12 month stock price consensus is $170.57 with a high of $188.00 and low of $132.00. The consensus 12 month stock price of $170.57 implies a total return of 4.15% with 1.20% from capital gains and 2.94% from dividends based on a current stock price of $168.54.
Analysts on Stock Chase seem to like this bank and they also like the purchase of Canadian Western Bank. Amy Legate-Wolfe on Motley Fool says that NA may be the less obvious bank to own but it has a better yield and is faster growing. Christopher Liew on Motley Fool says that this bank could be the best bank buy for 2026. This bank put out a press release via Newswire about their results for 2026.
Simply Wall Street via Yahoo Finance reviews this stock. They have a positive view of this bank and says this depends on Quebec remaining resilient and on the integration of Canadian Western Bank not increasing costs, reducing efficiency, or weakening credit quality more than analysts currently expect.
National Bank of Canada is the sixth-largest bank in Canada. It is a diversified financial services company, offering personal and commercial banking, wealth management, and capital markets services. The bank derives around 45% of its 2025 revenue from the province of Quebec, with additional operations in the rest of Canada and the United States. Its web site is here National Bank of Canada.
The last stock I wrote about was about was Bank of Nova Scotia (TSX-BNS, NYSE-BNS) ... learn more. The next stock I will write about will be Canadian Imperial Bank of Commerce (TSX-CM, NYSE-CM) ... learn more on Wednesday, January 21, 2026 around 5 pm. Tomorrow on my other blog I will write about Compounding Quality Newsletter.... learn more on Tuesday, January 20, 2026 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
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