Barclays Dividend: Dates, Forecasts, and Analysis

The UK banking sector rallied in 2024, with the Barclays (LSE:BARC) dividend getting hiked alongside many of its other peers. But what’s behind this sudden surge? And can investors reliably earn a passive income with Barclays shares? Here are all the details.

Why is the Barclays share price rising?

Throughout 2024, the Bank of England began its interest rate-cutting programme as economic inflation cooled off.

Typically, falling interest rates are bad news for banks as they apply pressure on the profit margin of their lending activity. However, in the case of Barclays, the bank also has an investment banking division that is actively investing in the financial markets. And when interest rates fall, financial instruments like stocks start to rise.

As a result, Barclays successfully delivered on its growth promises to shareholders. It boosted its return on tangible equity (RoTE), putting it on track to reach 12% by 2026. And with excess cash on the balance sheet, management initiated a £750m share buyback scheme and hiked its interim dividend as part of its plan to return up to £10bn to shareholders by 2026.

In other words, the Barclays share price is rising because of improved trading performance and hitting key performance milestones.

When does Barclays pay dividends?

Like with most companies, the exact timing of dividend payments is down to the discretion of the management team. However, since 2016, Barclays has issued payments to shareholders twice a year.

Typically, the ex-dividend dates occur in late February/early March and mid-August, with the actual payment issued usually within one month from the ex-dividend date. For example, Barclay’s 2024 ex-dividend dividend dates were 28 February and 14 August.

What is the dividend payout ratio for Barclays?

Looking at the latest full-year results for 2023, Barclays has paid a total dividend of 8p per share. This was funded by generated basic earnings per share of 27.7p. Therefore, Barclays’ payout ratio sits at around 29%. Hence, the bank is paying out only a relatively small portion of earnings to shareholders, which generally indicates higher sustainability.

When compared to the bank’s current share price of around 265p, Barclays’ dividend yield is approximately 3%. However, depending on whether management increases dividend payments in the future and the direction of the share price, Barclay’s yield could rise or fall moving forward.

Barclays dividend history

Barclays has paid a dividend every year since 2000. However, dividends haven’t always increased. And there has been a notable reduction since the 2008 financial crisis that still hasn’t recovered. 7

A leading cause of this is the bank’s necessary decision to issue a large chunk of new shares to raise capital and weather the storm during the great recession. And while management has been steadily buying back shares over the last decade, the firm still has significantly more shares outstanding compared to before the financial crisis erupted.

Barclays has not paid a special dividend over the last 25 years.

What is the Barclays dividend forecast for 2024 and 2025?

Barclays has outlined its near-term strategy and targets going out until 2026. As part of its ongoing strategy, the bank is seeking to deliver:

• 12% RoTE
• Return £10bn of capital back to shareholders through dividends and buybacks.
• Generate a total group income of £30bn.
• Reduce expenses to £17bn per year.

Based on these assumptions, institutional analysts have projected what the Barclays dividend may grow to. Current analyst consensus suggests the Barclays dividend will rise to 8.58p in 2024 and 9.20p in 2025.

However, it’s important to remember that forecasts are not guaranteed, and the dividend per share could be lower than current expectations.

Which Bank stocks pay the highest dividend?

There are other bank stocks listed on the London Stock Exchange also offering dividends. And as of November 2024, HSBC Holdings currently offers the highest yield across the FTSE 350.

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