The data’s in: British Stocks and Shares ISA holders are going crazy for NatWest (LSE: NWG) shares. That’s according to the latest report from UK brokerage service AJ Bell. The unassuming high-street bank took the lead spot on the Buy list ahead of many other, more traditionally popular stocks.
Folks bought more than twice as many NatWest shares as Rolls-Royce, and nearly four times as many as Nvidia!
What’s going on here? Are investors seeing the 20% fall in share price as an unmissable buying opportunity? Does the FTSE 100 bank truly deserve its place as the most popular stock (for now, at least)?
Why the frenzy?
While reading the mind of every single Stocks and Shares ISA holder is still (hopefully) beyond our scientific reach, there are a few clues to the mystery here.
The first is a large pullback on a stock that’s been flying. The bank booked a 12% increase in year-on-year operating profit for Q1 2026, beating analyst consensus in the process. And the share price? It’s down 20% since a high in January. Simply, investors might be looking at a great chance to buy in at a mega discount.
The drop’s made shareholder returns look ever better too. The forward dividend yield’s jumped to 6.42%. That puts it near the top of the Footsie big dividend payers. The dividend’s set to rise in the years ahead too.
And let’s not forget the big share buyback process which should create some upward pressure on the share price as well. The £750m buyback programme could mean Natwest offers that holy grail of big dividends combined with share price appreciation.
Is it a buy?
Of course, that share price dip didn’t come out of nowhere. The 20% fall – equivalent to over £10bn in market-cap – came in the wake of the conflict in Iran which looks set to increase inflation and dampen economies around the world. This could create an undesirable environment for the banking sector.
As one of the more British-focused of the FTSE 100 banks, NatWest is dealing with a few domestic issues too. On the one hand, the recent economic data of the UK being the fastest-growing economy in the G7 – with a 0.6% GD increase in the latest three months – is welcome news.
On the other, the leadership challenge to a prime minister who hasn’t celebrated his second anniversary in the job isn’t so welcome. Few companies like this kind of instability and banks especially so.
The last word? Only time will tell if the recent buying frenzy for NatWest shares turns out to be investors snaffling a bargain opportunity or simply catching a falling knife. I think there’s enough to like here for this to be stock worth considering however.
John Fieldsend has positions in Rolls-Royce and Nvidia. The Twelfth Magpie has recommended Rolls-Royce, Nvidia and Aj Bell Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor and Hidden Winners.
