When I look at the FTSE 100, one dividend stock instantly leaps out at me. It seems to have absolutely everything right now.
Fancy a high and rising yield? This stock is forecast to pay income of 5.29% this year, rising to 5.95% in 2027. Want share price growth on top? It’s rocketed 235% over five years, and 40% over the last 12 months. Want to bag a bargain? Despite its strong run, the forward price-to-earnings ratio is just 9.5.
On all of these key metrics, the stock looks a screaming buy to me. But am I missing something?
Is this FTSE 100 stock just too good?
The company in question is blue-chip bank NatWest Group (LSE: NWG). Like all the big FTSE 100 banks, its shares have been going gangbusters. So has the total dividend per share, as this quick list shows:
- 2025 – 32.5p
- 2024 – 21.5p
- 2023 – 17.0p
- 2022 – 13.5p
- 2021 – 10.5p
Note that massive 51% dividend jump in 2025. That followed out pre-tax profits of £7.7bn and a stunning Return on Tangible Equity (RoTE) of 19.2%. It’s just one part of a wider programme to return £4.1bn to shareholders, which includes a £750m share buyback. All purchased stock will be cancelled to reduce the total pool of share capital and boost future earnings per share.
The financial crisis is now firmly in the rearview mirror. NatWest has been widening margins and beating consensus estimates. But again, am I missing something?
As with every stock, there are risks. NatWest now has a laser focus on the UK economy, primarily retail and small business banking. Sadly, we’re struggling right now, and that could hit demand for mortgages and loans, and drive up credit losses. Especially if unemployment continues to climb. And if the supposed AI bubble bursts, every stock will take a beating.
Can NatWest keep driving profits?
Profits have been climbing nicely, as my table shows, but the board will have to work hard to push them even higher.
- 2025 – £7.7bn
- 2024 – £6.2bn
- 2023 – £5.6bn
- 2022 – £5.1bn
- 2021 – £3.8bn
To that end, it recently purchased wealth manager Evelyn Partners for £2.7bn. As with any acquisition, this brings operational risks, as the board has work hard to integrate the advisory group into its overall business, without crushing what made it worth buying in the first place.
All the banks have benefited from higher interest rates in recent years. That’s allowed them to widen their net interest margins, which measure the difference between what they pay savers and charge borrowers. If the oil price spike continues to unwind and inflation falls, margins could be squeezed, hitting income and profits.
After such a strong run, the great NatWest share price party could be coming to a close. But when I look at that low valuation and high yield, I still think it’s worth considering today. I bought NatWest in May and June. Now I’m tempted to buy it again in July.
Should you invest £5,000 in NatWest Group Plc right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if NatWest Group Plc made the list?
Harvey Jones owns shares in NatWest Group.
