For years, investors have been waiting around for the Lloyds (LSE: LLOY) share price to do something. Finally, it seems to be kicking into life.
The stock is up 19.5% in 2024 and 33.5% over the last 12 months. Its recent gains mean it has returned 16% over the last five years. During that time, its share price has climbed from 49.5p to 57.4p today.
It has wobbled in the last couple of weeks amid the volatility we’ve experienced, but it still managed to rise 7.7% last week.
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?
As a shareholder, that feels good to write. But I have one burning question: will the stock keep it up?
Good value?
If I knew that, investing would be a lot easier. The stock market is full of surprises. It could throw a tantrum at any time. There are plenty of risks that investors must be aware of, such as the heightened threat of a US recession in the past week, as well as lingering inflation. But I’m going to take an educated guess at it.
One way I can do that is simply by looking at Lloyds’ valuation. At 57.4p, the stock looks dirt cheap. That’s especially considering it used to trade closer to 500p during its heyday.
But while it may look cheap, is the stock really good value for money at the moment? Well, one way to investigate that is to look at the key price-to-earnings (P/E) ratio.
Currently, Lloyds’ P/E is 8.2. The FTSE 100 is floating around 12. So, it looks like good value compared to that.
In all fairness, all FTSE 100 banks look like decent value for money at the moment. But I still reckon Lloyds could be a bargain at that price. Its forward P/E is around 8.5 for 2025 and 6.9 for 2026. Again, not bad.
Rising payout
But aside from its cheap valuation, what does Lloyds have to offer? Well, I’m also a big fan of the passive income it provides.
The stock has a dividend yield of 5.1%. Its payout is covered comfortably by earnings.
That’s probably why the bank upped its dividend last year by 15% to 2.76p. In its half-year update, it announced that it was hiking its interim dividend by a further 15% to 1.06p per share.
Its 5%+ payout means it sits within the top 20 highest yielders on the FTSE 100. That yield will look even more enticing when the Bank of England cuts interest rates further.
More to come?
Overall, I think Lloyds will be able to keep rising. Don’t get me wrong, there’s a good chance it won’t be an easy journey. And I’m expecting some peaks and troughs along the way.
For example, as more rate cuts occur this will shrink Lloyds’ margins and therefore profits. It’s also heavily reliant on the UK for its revenues. So, a blip in the domestic economy will impact the business
But over the long run, I’m backing it. And I see good value in the stock today even despite its recent rally. I’m confident Lloyds will keep heading upwards in the years to come and that it has plenty more to give.
