Here are the latest 2023/2024 dividend forecasts for Lloyds, Barclays, and HSBC

The most recent dividend forecasts for a trio of UK banks suggest there’s some substantial income on offer from them in the years ahead.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Businessman use electronic pen writing rising colorful graph from 2023 to 2024 year of business planning and stock investment growth concept.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

UK bank stocks are offering some attractive dividend yields right now. This means they could be a great source of income. Here, I’m going to provide the latest dividend forecasts for Lloyds (LSE: LLOY), Barclays (LSE: BARC), and HSBC (LSE: HSBA). I’ll also give my take on the best bank stock to snap up right now.

Lloyds

Starting with Lloyds, it’s currently expected to pay out 2.78p per share in dividends for 2023, followed by 3.11p per share for 2024. At today’s share price of 45.3p, these projected payouts equate to yields of 6.1% and 6.9%.

Now, the good news here is that dividend coverage (a measure of dividend safety that’s calculated by dividing earnings per share by dividends per share) is quite high.

With analysts expecting Lloyds to generate earnings per share of 7.48p this year and 7.63p next, the dividend coverage ratios for 2023 and 2024 are 2.7 and 2.5 respectively. A ratio above two generally suggests a company’s payout is safe.

On the downside however, Lloyds is very exposed to the UK economy (and the housing market, in particular). This is a risk for income investors to consider.

Barclays

Turning to Barclays, analysts currently expect payouts of 8.91p per share and 10.1p per share for 2023 and 2024 respectively. These payouts translate to yields of 5.7% and 6.5% at today’s share price of 155.3p.

Now again, there’s a high level of coverage here. Currently, the dividend coverage ratios for 2023 and 2024 stand at 3.6 and 3.4.

Another plus is that the company’s valuation is very low. Currently, Barclays has a forward-looking price-to-earnings (P/E) ratio of just 4.8 versus 6.1 for both Lloyds and HSBC.

One risk here though is that Barclays has quite a lot of exposure to the US. And there’s still talk of a recession over on that side of the pond.

Another is that US regulators are introducing new liquidity rules for banks. This means Barclays may need to set aside billions more in capital to guard against risk.

HSBC

Finally, we have HSBC. It’s currently forecast to pay out 63.1 cents per share for 2023 and 79.8 cents per share 2024 (it reports in US dollars). So at today’s share price of 643.1p, we are talking about yields of 8% and 10.2%.

Dividend coverage stands at around 2.0 and 1.6, so it’s a bit lower than Lloyds and HSBC.

HSBC has quite a lot of focus on Asia these days. And this is a region with a lot of long-term growth potential. The stock is also the only one of the three that’s currently above its 200-day moving average (in a longer-term uptrend).

Of course, the big risk here is the bank’s exposure to China (and the Chinese property market). This adds some uncertainty in the near term.

The best bank stock?

As for the best bank stock of the three, my pick is HSBC. Not only does it have the highest yield (assuming the forecasts are accurate), but it also has the most growth potential in the long run, to my mind.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Ed Sheldon has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays Plc, HSBC Holdings, and Lloyds Banking Group Plc. HSBC Holdings is an advertising partner of The Ascent, a Motley Fool company. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Dividend Shares

Investing Articles

Here’s how an investor could use their £20k ISA to target a second income of £1,200 in year one

Harvey Jones shows how buying high-yield FTSE 100 companies in a Stocks and Shares ISA can potentially generate a high-and-rising…

Read more »

Investing Articles

Is the 8.8% Legal & General dividend yield a golden opportunity or a red flag?

The Legal & General dividend yield is edging towards 9%, with the payout set to keep growing. This writer explains…

Read more »

Dividend Shares

Can I make more passive income by investing in the US or the UK stock market?

Jon Smith weighs up where he'd be better off investing for maximum passive income potential, and includes one specific idea.

Read more »

UK money in a Jar on a background
Investing Articles

10% yield! I’m mightily tempted by this FTSE 100 dividend stock

This stock is the highest-yielding dividend payer in the FTSE 100 index. So why am I a bit hesitant to…

Read more »

Diverse group of friends cheering sport at bar together
Investing Articles

Up 125% in 5 years and yielding 6.5%! Are Aviva shares the FTSE’s best all-rounder?

Harvey Jones says Aviva shares have given investors plenty of dividend income and share price growth in recent years. Can…

Read more »

Investing Articles

£1,400 a year dividend income from a Stocks and Shares ISA? Here’s how

A new Stocks and Shares ISA year begins very soon and that certainly concentrates the mind on thinking about how…

Read more »

Passive income text with pin graph chart on business table
Investing Articles

Could these super-high UK dividend yields be at risk?

These five FTSE 100 shares offer dividend yields of up to 9.4% a year. Alas, one of these payouts will…

Read more »

Investing Articles

Could the FTSE 100’s newest addition be a great passive income investment?

A 2.5% dividend yield doesn’t look like much, but Coca-Cola Europacific Partners has a lot of the hallmarks of a…

Read more »