If LSE stocks crash, I’m going to buy even more Lloyds shares 

Lloyds shares look great value today. If we get a stock market crash, as could happen, I think they’ll look completely irresistible.

| 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.

Investor looking at stock graph on a tablet with their finger hovering over the Buy button

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.

I’ve been loading up on Lloyds (LSE: LLOY) shares over the summer, and my decision to build a stake in the stock is gradually beginning to pay off. I recently reinvested my first dividend. I’m already about 5% up overall even with the shares still trading at under 45p.

These are early days, of course. Like all the shares I buy, I’m planning to hold Lloyds for 10 or 20 years, with luck, and ideally longer. So what happens in the first couple of months is neither here nor there. 

What this does do is show the attraction of buying top FTSE 100 stocks when they’re cheap, as I think Lloyds is. Even though markets are a bit shaky right now – particularly in the US – I don’t think its share price has much further to fall. Unless something really extreme happens.

Should you invest £1,000 in Lloyds Banking Group right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Lloyds Banking Group made the list?

See the 6 stocks

One of my favourite stocks

Given my strategy of averaging down, it also means I’m not worried if it does drop. In that case, I’ll simply buy more Lloyds stock at the lower price.

Naturally, buying shares always has risks, even a top blue-chip like Lloyds. While UK interest rates have peaked, inflationary pressures in the US could upend my assumptions. 

Higher interest rates would put the housing market under more pressure, which would hit Lloyds as the biggest UK’s biggest mortgage lender. In July, news that it had set aside an extra £662m for potentially bad loans, up 76% in a year, tanked the share price.

However, with five-year fixed mortgage rates dipping below 5%, I still don’t expect a full-blown crash, despite the struggles faced by first-time buyers.

The assumption now is that interest rates will stay higher for longer, with no immediate cut next year. I think that’s overdone. The market is in a volatile mood. One day it’s upbeat about interest rate cut prospects, the next buried in gloom. What was that Warren Buffett quote about the stock market being a manic depressive?

I’m not as moody as the market

I don’t accept that we need to return to near-zero interest rates for Lloyds shares to take off. That would squeeze net interest margins, the difference between what it pays savers and charges borrowers, and base rates of 3% of 4% might work better. 

When markets are feeling nervous, as today, it pays more than ever to keep a cool head, and that’s what I’m doing about Lloyds. At today’s low valuation of just 6.2 times earnings, I feel there’s plenty of scope for a recovery. Maybe later this year, maybe in the spring. Who knows? All I know is that it should come at some point, and when it does, I’ll be holding Lloyds shares.

Current volatility is a good time to buy more, and lock in its juicy yield. It’s now forecast to yield 6.12% in 2024, revising to 6.86% in 2025.

Markets are down on Lloyds. Its recent 23% rise in half-year profits to £3.8bn didn’t change that. Even if it doesn’t recover as much as I hope and expect, its high and rising dividend yield still makes this a terrific time for me to buy it.

Should you buy Lloyds Banking Group shares today?

Before you decide, please take a moment to review this first.

Because my colleague Mark Rogers – The Motley Fool UK’s Director of Investing – has released this special report.

It’s called ‘5 Stocks for Trying to Build Wealth After 50’.

And it’s yours, free.

Of course, the decade ahead looks hazardous. What with inflation recently hitting 40-year highs, a ‘cost of living crisis’ and threat of a new Cold War, knowing where to invest has never been trickier.

And yet, despite the UK stock market recently hitting a new all-time high, Mark and his team think many shares still trade at a substantial discount, offering savvy investors plenty of potential opportunities to strike.

That’s why now could be an ideal time to secure this valuable investment research.

Mark’s ‘Foolish’ analysts have scoured the markets low and high.

This special report reveals 5 of his favourite long-term ‘Buys’.

Please, don’t make any big decisions before seeing them.

Claim your free copy now

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.

Harvey Jones has positions in Lloyds Banking Group Plc. The Motley Fool UK has recommended Lloyds Banking Group Plc. 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.

Pound coins for sale — 51 pence?

This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent ‘Best Buy Now’ has a price/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 51p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

More on Investing Articles

Investing Articles

Is the Rolls-Royce share price still undervalued in 2025?

After massive growth in the Rolls-Royce share price, Charlie Carman considers whether the FTSE 100 aerospace and defence stock is…

Read more »

Investing Articles

How an investor could target a £43k lifelong passive income starting with just £5 a day

Harvey Jones says it's possible to build a high-and-rising passive income by investing small, regular sums in FTSE 100 shares.…

Read more »

Investor looking at stock graph on a tablet with their finger hovering over the Buy button
Investing Articles

£10,000 invested in Lloyds shares on 7 April is already worth…

After a dip in early April, Lloyds shares are back to their 30%+ year-to-date gain in 2025. And analysts are…

Read more »

US Stock

What I’d look to buy as the US stock market heads for the worst month since 1932

Jon Smith sifts through the US stock market to try and find some ideas that have fallen in value recently…

Read more »

Growth Shares

Prediction: I think £1,000 invested in this UK stock could double by 2030

Jon Smith runs through a FTSE 250 stock with a market cap just over £1bn that he feels has the…

Read more »

Investing Articles

With £10k in savings, here’s how an investor could target a second income of £500 a month

£10k in savings could be the foundation needed towards a powerful second income. Our writer details some steps necessary to…

Read more »

Asian man looking concerned while studying paperwork at his desk in an office
Investing For Beginners

£1k invested in the FTSE 100 on ‘Liberation Day’ is now worth…

Jon Smith talks about the volatility in the FTSE 100 in the weeks since the tariff announcements and flags up…

Read more »

Long-term vs short-term investing concept on a staircase
Investing Articles

Barclays’ share price is down 7% from March, so is now the right time for me to buy?

Barclays’ share price has dipped recently, which could mean a bargain to be had. I took a deep dive into…

Read more »