NAB is scheduled to report its FY16 result on Thursday and we’re expecting FY16 cash earnings of $6.4b. The final dividend will likely be around $0.98 fully franked & we continue to expect the dividend to be cut next year.
We are forecasting a 2H16 credit impairment charge of $500m which is an increase of $125m on the 1H16 number.
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Based on a slight reduction in dividends the FY18 yield is 6.75%.
Selling covered calls at or near $28.50 into early next year, with a view towards collecting the upcoming dividend is our preferred strategy.
