Anybody who bought Lloyds (LSE: LLOY) shares three years ago will be pleased with themselves. The shares have more than doubled from around 45p to 96p today, and paid generous dividends on top. I’m in that happy position myself. I got lucky with my timing and I’m up 125% with dividends reinvested. But do I think the shares are still worth considering today?
That’s always the question when a stock has already had a strong run. Investing tends to be cyclical, and everybody wants to buy at the bottom rather than the top. The trouble is, timing these things consistently is impossible.
Would Lloyds sit nicely in your portfolio?
The key with a stock like Lloyds is to hold it for the long term through the various cycles, while reinvesting dividends and letting the total return steadily compound. That’s my plan, and so far it’s worked nicely. Early days, though.
The FTSE 100 bank’s shares have dipped 7.5% in the last month, and I’m wondering if this offers a second chance for investors who thought they’d missed the fun.
The Lloyds price-to-earnings ratio now stands at 13.6. A few months ago it was pushing 17, and at that stage I thought the shares looked a bit overheated. They’re cheaper today, but not dirt cheap.
The trailing yield has slipped to 3.8%, but that’s largely because the share price has done so well. The board is being generous with the dividend hikes, as my table shows. Ignore the huge jump in 2021, which followed pandemic-era cuts in 2019 and 2020.
| Year | Total dividend per share | % growth |
| 2025 | 3.65p | 15.1% |
| 2024 | 3.17p | 14.9% |
| 2023 | 2.76p | 15.0 % |
| 2022 | 2.40p | 20.0% |
| 2021 | 2.00p | 250.9% |
With payouts rising 15% in each of the last three years, the income looks attractive. The yield is forecast to hit 4.5% this year, then 5.3% in 2027. Of course, dividends are never guaranteed.
Is the FTSE 100 bank making money?
Lloyds is still making serious money. In 2025, statutory profit before tax came in at £6.7bn. That was down from £7.5bn the previous year, largely due to provisions for motor finance mis-selling and impairment charges for bad debts. When it comes to banks, there is always a risk around the corner.
Lloyds is heavily exposed to the UK economy and housing market, so a downturn triggered by events in Iran or Westminster could hit mortgage demand and push up bad debts.
The bank has been supporting the share price with buybacks and is currently running a £1.75bn programme to reduce share capital and boost shareholder value.
So is the latest dip an opportunity to consider buying? I’d say yes, but not an unmissably brilliant one. We may get a better entry point over what could be a turbulent summer. Have I bought them myself? No. I’ve just snapped up rivals HSBC and NatWest instead. Both dipped earlier this month, and since I didn’t own either, I chose them for diversification. I’ll be chasing more banking sector opportunities in the weeks ahead. I suggest you keep your eyes peeled, too.
