The UK banking group NatWest Group (ticker NWG) has delivered a remarkable total return of roughly 464 per cent to shareholders who invested £10,000 in October 2020 — translating into a current value of around £56,000.

Over that five-year period, the company also paid more than £9 billion in dividends, with a forward yield currently estimated at about 4.5 per cent.

Much of the upside has been driven by elevated interest rates, which boosted net interest margins and delivered strong earnings growth as lending expanded and deposit balances remained high.

In the six months to June 2025, NatWest reported pre-tax profits of £3.6 billion, up 18 per cent year-on-year, and announced a £750 million share buy-back alongside a 58 per cent increase in its interim dividend.

However, analysts caution that the favourable environment may shift.

As central banks reduce interest rates, margins on new loans may shrink, and the offsetting benefit from higher lending volumes is not assured given weak economic growth and elevated inflation.

Credit losses remain a latent risk, especially if consumer spending and business investment falter.

To maintain its generous payout and potential further capital returns, NatWest will need to demonstrate disciplined cost control, strong loan growth and prudent risk management.

Analysts at JPMorgan recently raised their 12-month target price for the stock to 700 pence, implying another ~28 per cent capital upside in addition to the dividend yield.

For value-oriented investors, NatWest presents an intriguing option given its combination of sustained dividend history and equity upside.

But they must balance that against macro uncertainty, regulatory oversight risks and the possibility that the current dividend yield may compress if conditions turn.