What’s next for the Lloyds share price, 30p or 60p?

Even after accounting for cash dividends, the Lloyds share price has gone nowhere for over five years. But is it set to turn the corner at long last?

| 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.

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.

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.

The Lloyds Banking Group (LSE: LLOY) share price is one of the most closely watched in the London market. That’s because these shares are a popular pick among value investors, ranging from top fund managers to individual shareholders (including me).

Alas, Lloyds shares have been a brutal value trap for years. Indeed, this stock has been stuck in a rut for so long, it’s been a long-term lemon since the global financial crisis of 2007-09.

The Lloyds share price’s losing streak

As I write (before market close on Tuesday, 21 November), Lloyds shares stand at 42.68p. This leaves them 8.3% above their 52-week low of 39.42p (reached on 24 October), valuing this business at £27.1bn.

Should you invest £1,000 in Capita Plc 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 Capita Plc made the list?

See the 6 stocks

At its 2023 high, this stock hit 54.33p on 9 February, but has been nowhere near ever since. Here’s how the share price has performed over five different timescales:

One month+3.1%
Six months-9.1%
2023 to date-5.9%
One year-6.1%
Five years-25.3%

Other than a 3% bump over the past month, the Lloyds share price looks lost. As well as going nowhere this year, it’s lost almost a quarter of its value over a half-decade. Then again, these returns are not all they seem.

Lloyds is a dividend dynamo

The above figures exclude cash dividends — regular cash distributions paid by some companies to their shareholders. Here are the dividends per share the Black Horse bank has paid over the last five years:

Financial year202320222021202020192018
Total dividend0.92p*2.4p2p0.57p3.21p
*Interim dividend only

For much of the Covid-19 crisis of 2020-21, the Bank of England barred key British banks from paying dividends. Thus, Lloyds paid no dividends for its 2019 financial year. Later, it returned to distributing surplus cash with a payout of 0.57p for its 2020 financial year.

In total, this UK banking giant has paid out dividends of 9.1p a share over five years. That comes to more than a fifth (21.3%) of the current share price. Even so, in terms of total returns with dividends reinvested, Lloyds shares have made barely any ground since late 2018.

I own Lloyds shares for the long run

At current levels, Lloyds stock offers a healthy cash yield of 5.9% a year, comfortably covered by trailing earnings. That’s almost 1.5 times the 4% yearly dividend yield of the wider FTSE 100 index.

Disclosure: my wife and I bought into Lloyds at a share price of 43.7p in June 2022. To date, we are sitting on a capital loss on paper of 2.3%. However, this is more than offset by our (reinvested) dividends so far.

What next for the Lloyds share price: 30p or 60p? I strongly suspect that it will be the latter — given that the price got within 5.67p of this milestone before March’s US banking crisis crashed financial stocks. Then again, I could be accused of ‘talking up my own book’, given that I already own Lloyds shares.

Finally, with the UK economy weakening and consumers struggling with higher interest rates and energy bills, 2024 looks set to be a tough year for financial firms. Nevertheless, I’m very confident that the Lloyds share price will soar past 60p during my ownership!

Investing in AI: 3 Stocks with Huge Potential!

🤖 Are you fascinated by the potential of AI? 🤖

Imagine investing in cutting-edge technology just once, then watching as it evolves and grows, transforming industries and potentially even yielding substantial returns.

If the idea of being part of the AI revolution excites you, along with the prospect of significant potential gains on your initial investment…

Then you won't want to miss this special report inside Motley Fool Share Advisor – 'AI Front Runners: 3 Surprising Stocks Riding The AI Wave’!

And today, we're giving you exclusive access to ONE of these top AI stock picks, absolutely free!

Get your free AI stock pick

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.

Cliff D’Arcy has an economic interest in Lloyds Banking Group shares. The Motley Fool UK has recommended Lloyds Banking Group. 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 Investing Articles

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

Down 37% from May, does Glencore’s near-£3 share price look cheap to me?

Glencore’s share price has tumbled from its one-year traded high, which suggests there may be good value in it. I…

Read more »

Dividend Shares

How much would an investor need in dividend shares to make £1,000 a month?

Jon Smith talks through both the strategy and the numbers behind the investment aim of using dividend shares to make…

Read more »

A row of satellite radars
Investing Articles

Defence spending is on the rise and this UK growth stock could be set to cash in

With the UK ready to increase its defence spending, Stephen Wright thinks the stock likely to benefit the most isn’t…

Read more »

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

£11,000 in savings? Here’s how investors could use that to target an annual passive income of £12,892 over time!

Money put into high-dividend-paying shares with the returns used to buy more of them can generate potentially life-changing passive income.

Read more »

Investing Articles

Down 10% and 15% in a month! 2 cheap shares investors might consider buying with £2k today

It's always a good time to buy cheap shares! Harvey Jones picks out two FTSE 100 companies that have fallen…

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

Here’s how £350 a month could put a stock market beginner on the road to wealth!

Interested in getting a foot on the stock market ladder? Our writer breaks down the facts and figures so aspiring…

Read more »

BUY AND HOLD spelled in letters on top of a pile of books. Alongside is a piggy bank in glasses. Buy and hold is a popular long term stock and shares strategy.
Investing Articles

The 5 most popular FTSE 100 shares on the AJ Bell trading platform

Our writer’s been looking at the FTSE 100’s most bought stocks on one particular investment platform. And he’s heartened by…

Read more »

Young Black man sat in front of laptop while wearing headphones
Investing Articles

Why isn’t everyone aiming for £37m in stocks and shares?

It’s never too early to start investing in stocks and shares through a SIPP or ISA. Dr James Fox explains…

Read more »