Picture supply: Getty Photos
Anybody who had the foresight (or luck) to purchase Lloyds Banking Group (LSE: LLOY) shares at any level since 2019 must be a contented bunny. The Lloyds share worth has soared following its collapse throughout 2020’s Covid-19 disaster. However after such sturdy progress over 5 – 6 years, certainly the long run appears much less vivid for Lloyds shareholders? Listed here are my ideas…
Beautiful Lloyds shares
I bear in mind the inventory market crash of 2020 extraordinarily nicely, as I’d simply returned to writing for The Motley Idiot simply because the market hit all-time low in March 2020. From 2020’s peak to low, the FTSE 100 and S&P 500 indexes crashed by round 35%. Again then, my spouse and I poured money into UK shares and US shares, completely satisfied that each markets had been crazily undervalued.
Though international inventory markets shortly rebounded from their spring 2020 lows, the Lloyds share worth didn’t backside out till the autumn. On 22 September 2020, shares within the Black Horse financial institution hit an intra-day low of 23.58p. Anybody shopping for at that troubled time would have greater than quadrupled their cash since, with juicy money dividends on high.
As I write, Lloyds shares stand at 99.88p, valuing this massive British financial institution at £58.9bn. The share worth has been even increased in 2026, having hit 101.75p on Tuesday, 6 January. This leaves this well-liked and broadly held top off 85.4% over one 12 months and a whopping 171.2% over 5 years (excluding dividends).
I’m a contented holder
For the report, my household portfolio owns this FTSE 100 inventory, paying 43.5p a share in mid-2022 for our holding. To this point, we’re sitting on a paper acquire of 129.8%, plus many dividends as well.
I’m stunned such a ‘boring, old-economy’ inventory has generated such spectacular returns over the previous 3½ years. We purchased Lloyds shares for his or her then-generous dividend yield, which has fallen steeply because the share worth soared. Then once more, as a long-term worth investor, I’ll fortunately take my income nonetheless they arrive.
Talking of dividends, the Lloyds payout rose sharply from 2p for 2021 to three.17p for 2024, a leap of 58.5% in three years. I anticipate this shareholder reward to maintain rising modestly — perhaps rising at excessive single-digit percentages.
Lloyds isn’t low cost anymore
At present worth ranges, these shares commerce on nearly 15.2 occasions historic earnings, delivering an earnings yield of 6.6% a 12 months. Which means the dividend yield of three.3% a 12 months is roofed twice by trailing earnings, which is a powerful margin of security.
To me, these don’t resemble the basics of a screaming purchase. For instance, once we purchased Lloyds shares, the dividend yield was nearly twice its present stage. Moreover, the share worth is nearly twice its 2025 low of 52.43p, hit nearly a 12 months in the past on 10 January 2025.
What subsequent for this Footsie inventory? With rates of interest anticipated to fall this 12 months and the housing market wanting weak, I’m not anticipating an excessive amount of pleasure in 2026. Maybe a peak of 115p for an extra acquire of 15%, however who is aware of? However although Lloyds shares are not a cut price purchase, it’d take one other disaster to persuade me to promote our inventory!
