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NatWest (LSE: NWG) shares have rebounded at speed from the shock caused by US president Donald Trump’s ‘Liberation Day’ tariffs.
When the FTSE 100 closed on 2 April, NatWest was trading at 463.5p. Then Trump announced his plan, and chaos ensured. By 9 April, the NatWest share price had slumped more than 11% to 411p.
Motley Fool UK urged readers to stay calm and consider buying the dip rather than selling in panic. It’s what we always do, every time there’s a panic, and pretty much every time it has paid off.
Timing the bottom is always guesswork, but anyone who got lucky and invested £10,000 near that trough would be up 18%, based on the current price of around 487p. Their £10k would now be worth around £11,800.
Momentum and recovery
Before Liberation Day, NatWest was happily rattling along. Measured over 12 months, its shares have surged 54%.
Stretch that out to five years, and the gain rises to around 300%. That suggests this isn’t just a short-term bounce but part of a broader recovery story, accelerated in part by the government reducing its stake and returning more than 98% of the bank to private hands.
Despite that rally, the valuation still looks undemanding, with a price-to-earnings ratio of just 9.7. Dividends are another attraction.
The trailing yield stands at 4.42%, while analysts expect to hit 5.92% in 2025 and 6.29% in 2026. NatWest has committed to returning around 50% of its profits via ordinary dividends from 2025, and will consider share buybacks too.
Q1 2025 results released on 2 May support the optimism. Profits beat expectations, jumping 36% to £1.25bn, while return on tangible equity hit an impressive 18.5%. Net interest margin, a key banking profit metric, edged up to 2.27%, while both lending and deposits grew.
Dividends and buybacks
Nothing moves in a straight line, and there are still risks to consider. Another Trump tariff shock could easily inject fresh volatility into global markets.
And while interest rates remain elevated today, there’s no guarantee they’ll stay that way. If inflation eases and central banks cut rates, NatWest’s net interest margins could retreat, putting pressure on profits.
The first quarter’s impairment charge of £189m also reminds us that defaults, while stable, remain a risk.
NatWest expects to hit the upper end of its 2025 income and returns guidance, but these are still only projections.
So what do the experts say? The 16 analysts covering the stock see a median 12-month share price of just over 361p. If they’re right, that’s a rise of around 13.7% from today. Combined with that forward yield, the total one-year return could approach 20%. But it’s still a forecast and contains plenty of guesswork.
A long-term opportunity
Of the 18 analysts following the stock, an impressive 14 rate NatWest a Strong Buy. Three say Hold, and just one calls it a Strong Sell. I’m not in that last camp.
Despite its recent strong run, I think NatWest shares are still worth considering for investors seeking a blend of dividends and long-term growth. Not to make a quick profit, but as a reliable part of a well-balanced portfolio.
