The Lloyds Banking Group (LSE: LLOY) The share price has remained significantly resilient despite growing fears about the UK economy. In fact, it has risen in price by about 4% in the last month, about 1.1% more than the broader FTSE 100 It has also increased by 63% in the last 12 months.
For a stock whose fate is so closely linked to the performance of the UK economy, it can be considered impressive. Even the fact that domestic GDP has risen at its slowest pace for six months in July has prevented Lloyds’ share price from rising. It is even more surprising that Lloyds has no exposure abroad that could support profits as the economic situation here deteriorates.
FTSE 100-kill standard
Lloyds is clearly an organization whose risk profile seems to be deteriorating (at least in my eyes). Yet fans of the FTSE 100 firm could argue that the price of cheap LLOY shares reflects this growing threat.
City analysts expect Lloyds’ profits to increase after the initial push of Covid-1 of 2020 on earnings. 510% bottom line growth is forecast for this year. It multiplies bank trading by the forward price-to-earnings (P / E) ratio. This is some distance below the wide FTSE 100 average 13.5 times. This is more interesting than the similar proportions of industry competitors HSBC (9 times) and NatWest (10 times).
5.3% dividend yield!
On top of that, a lawsuit could be filed that Lloyds is one of the best dividend stocks to buy at current prices. The expected dividend growth in 2021 and 2022 produced a glorious yield of 4.8% and 5.3%, respectively. These figures show that Futsy Forward lost an average of 3.5.5%. It is especially important to collect dividend shares with high yields in an era of inflation catastrophe.
Large yields are not the only reason Lloyds looks good as an income stock. The projected payments for 2021 and 2022 by expected earnings are 3.4 times and 2.4 times. These are 2 times above the security benchmark, which means that profits will probably double the amount paid in dividends.
Is Lloyds’ share price cheap enough?
The outlook for the UK economy remains bleak but there is good news for Lloyds. British home prices are rising at the fastest pace since 2007, which is an encouraging sign for the country’s largest home loan provider. There is much more to it than the multi-billion pound digital investment program that helps it cut costs and take on challenging banks.
That said, I’m afraid the price of Lloyds shares isn’t cheap enough to tempt me to invest. It may be 63% on a 12-month basis, but it has basically flattened over the last decade because lower interest rates have hurt profits. I expect the central bank’s policy to remain extremely lax as the UK economy is likely to be hit by a deadly epidemic এবং and a Brexit-related hangover.
Moreover, the rate at which challengers are occupying customs from established banks like Lloyds is also a major concern for me. All things considered, I think there are many more interesting dividend stocks for me at the moment.
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Ryston Wild has no position on any of the shares mentioned. Motley Full UK is recommended by HSBC Holdings and Lloyds Banking Group. Opinions expressed in the companies mentioned in this article may differ from those of the author and therefore our official recommendation in our subscription services such as Share Advisor, Hidden Winner and Pro. Here at The Motley Flower we believe that considering a variety of insights makes us a better investor.