The shares peaked at 6,116p on 1 March 2007, before falling off a cliff as the banking crisis struck and former Royal Bank Of Scotland boss Sir Fred Goodwin became a national hate figure.

The RBS name has gone but the shares still carry the burden, trading at just 265.3p today. Taxpayers still have a substantial-but-shrinking 38.6% stake. The renamed bank is a different beast these days. Gone is the era of high-risk, high-reward speculation. Now it sticks to the humdrum daily round of personal and business banking, rather like FTSE 100 rival Lloyds Banking Group.

It’s a lot more solid today

Both NatWest and Lloyds made it through the recent banking panic largely unscathed, while Barclays took a bigger knock due to its US investment banking operations.

Yet there’s still life in the NatWest share price, especially if I cherry pick my performance period, with the stock up 108.68% in three years. Over 12 months it has fallen 7.61%, which I find tempting.

I’ve developed a habit – which I hope is a good habit although I’m not sure – of favouring companies whose share prices have fallen rather than climbed. I dread jumping onto a bandwagon just as the wheels come off. So instead I look for laggards, hoping for acceleration.

NatWest shares look dirt cheap today, trading at just 5.97 times earnings for 2023. The price-to-book value of 0.69 appears to confirm this (a figure of 1 suggests fair value).

Last year, its shares yielded 11.4%, one of the highest numbers on the FTSE 100. The forecast yield for 2023 is 6.68%, then 7.36% for 2024. Those are lower, but still highly attractive. Chief executive Alison Rose intends to maintain NatWest’s shareholder payout ratio of 40%, and may throw in share buybacks for good measure.

Taking the 2023 yield, I’d need to spend £17,964 buying 6,771 NatWest shares to hit my annual income target of £1,200 a year. That’s a lot to spend on one stock, my maximum is £5,000, which would give me income of £334 a year. That’s still pretty good and if Rose sticks to her plans, it should rise steadily over time.

I’ve already got exposure

No dividend is guaranteed, of course, and NatWest still needs to generate the cash to fund it. Much now depends on what happens to inflation and interest rates. If both remain high, that could hit business profits, increase job losses, and drive property repossessions, none of which would be good for NatWest.

On the other hand, sustained high interest rates would boost the bank’s net interest margins, the difference between what it pays savers and charges borrowers. So today’s risks cuts both ways. Another banking crisis would also be a worry, although NatWest looks solid.

I already have exposure to the banking sector through my holdings in Lloyds, which has a similar yield, valuation and risk profile. I’d happily to buy NatWest shares for long-term income and growth in June, but diversification demands I go shopping for shares in other sectors.

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