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Anyone who had the foresight (or luck) to buy Lloyds Banking Group (LSE: LLOY) shares at any time from 2019 should be a happy bunny. Lloyds’ share price has risen following its collapse during the 2020 Covid-19 crisis. But after such strong growth over five or six years, surely the future is looking less bright for Lloyds shareholders? Here are my thoughts…
Lovely Lloyds shares
I vividly remember the stock market crash of 2020, as I was just getting back into writing The Motley Fool just as the market bottoms in March 2020. From 2020 up to the bottom, FTSE 100 again S&P 500 indexes are down about 35%. At the time, my wife and I were pouring cash into UK stocks and US stocks, fully convinced that both markets were incredibly undervalued.
Although global stock markets quickly recovered from their spring 2020 slump, Lloyds’ share price did not fall until the autumn. On 22 September 2020, shares in Black Horse Bank rose to 23.58p. Anyone who buys during that troubled period will quadruple their money since then, with sweeter dividends on top.
As I write, Lloyds shares stand at 99.88p, valuing Britain’s biggest bank at £58.9bn. The share price rose sharply in 2026, reaching 101.75p on Tuesday, 6 January. This leaves this popular and widely held stock up 85.4% in one year and up 171.2% in five years (excluding dividends).
I am a happy owner
For the record, my family’s portfolio owns this FTSE 100 stock, paying a dividend of 43.5pa in mid-2022 to hold it. To date, we are sitting on a paper profit of 129.8%, with more profits to start.
I’m amazed that a ‘boring, old’ stock has made such a spectacular return over the past 3½ years. We bought Lloyds shares at their current dividend, which has fallen significantly as the share price has risen. Then again, as a long-term value investor, I’ll happily take my profits when they come.
Speaking of dividends, Lloyds’ payout rose sharply from 2p in 2021 to 3.17p in 2024, up 58.5% in three years. I expect this shareholder reward to continue to rise slowly – perhaps growing in the high single-digit percentages.
Lloyds is no longer cheap
At current price levels, these shares trade at approximately 15.2 times forward earnings, yielding a 6.6% annualized cash yield. This means that the dividend yield of 3.3% per annum is covered twice by earnings, which is a strong margin of safety.
To me, these are not the same as the basics of a screaming purchase. For example, when we bought Lloyds shares, the dividend yield was almost double its current level. Furthermore, the share price almost doubled in 2025 to a low of 52.43p, reaching almost a year ago on 10 January 2025.
What’s next for this Footsie stock? With interest rates expected to drop this year and the housing market looking weak, I don’t expect much excitement in 2026. Maybe a higher price of 115p for another 15% profit, but who knows? But even though Lloyds shares are no longer a bargain, it may take some trouble to convince me to sell our stock!
