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I knew NatWest (LSE: NWG) shares were heating up nicely, but I didn’t realise just how much smoke they were throwing off.
The FTSE 100 high street bank has been back in the headlines as the Treasury finally sold off the last of its stake. For the first time since the financial crisis, NatWest is entirely in private hands.
The debate over the 2008 bailout still rumbles on. Taxpayers lost around £10bn, but letting Royal Bank of Scotland (as it then was) go under would have been a huge risk.
Investors who bought in the years after the crash may have wondered whether it should have been left to rot. The shares were dead money for ages.
FTSE 100 recovery play
But that’s all changed. Over the last five years, the NatWest share price has jumped 306%.
That number needs context. Five years ago, the world was in lockdown, the economy frozen and banks bracing for a wave of loan defaults. NatWest shares were on the floor. So that flatters the figure.
Still, the last year has been pretty stunning, with the stock up 67%.
Yet the story isn’t just about growth. Even after that rally, NatWest shares still offer a generous yield of 4.09%. Analysts reckon that will rise to 5.25% this year and 6.12% by 2026.
Earlier today, I screened the FTSE 100 for the biggest dividend growers of the last five years. NatWest was almost at the top, with a compound annual dividend growth rate of 60.8%.
The detail is worth digging into. In 2019, NatWest rebased its dividend, cutting it by two-thirds to just 2p per share. So again, it was starting from a low base. But since then, growth has been stellar – including a 250% increase in 2021, as my table shows.
| Year | Total | Growth |
| 2019 | 2p | -63.64% |
| 2020 | 3p | 50.0% |
| 2021 | 10.5p | 250.0% |
| 2022 | 13.5p | 28.57% |
| 2023 | 17p | 25.93% |
| 2024 | 21.5p | 26.47% |
Investors with longer memories haven’t forgotten that the bank didn’t pay a penny in dividends between 2008 and 2017. It’s had a lot of catching up to do. Better late than never.
Top income stock
Q1 2025 results, published on 2 May, showed a 38% rise in operating profit before tax to £1.8bn, beating consensus estimates of £1.6bn. Return on capital remained strong, and mortgage lending has held up.
That said, risks remain. The UK economy is still struggling. Interest rates may stay higher for longer, hurting mortgage demand. If rates fall, that’ll squeeze bank margins.
NatWest isn’t the swashbuckling growth stock it once was. It’s had its wings clipped since the crash. CEO Paul Thwaite is pushing the Treasury to relax ring-fencing rules that separate retail banking from riskier investment banking. That could change the picture. Time will tell.
For now, NatWest still looks really good value, trading at around 10 times earnings. The big share price gains may be behind us. But with steady income, strong cash returns, and a lower-risk profile, there could still be more to come. I still think NatWest shares are worth considering today.
