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.
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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 year | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 |
| Total dividend | 0.92p* | 2.4p | 2p | 0.57p | – | 3.21p |
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!
