Lloyds (LSE: LLOY) shares have had a terrific run. They’re up 29% in the last 12 months, and 105% over five years.
And that’s just the growth. The FTSE 100 bank has paid investors loads of income too. Better still, that income is rising every year. Check out the dividend growth for the past five years.
| 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% |
Don’t be misled by that massive jump in 2021, though. That was down to the board repairing the dividend after cutting it during the pandemic.
Does that dividend look secure?
The ideal dividend stock increases shareholder payouts year after year. However, I don’t expect Lloyds to hike dividends by 15% every year. That may slow over time. Yet, Lloyds can afford to be generous, because statutory pre-tax profits have been growing steadily too.
- 2025 – £6.7bn
- 2024 – £6.0bn
- 2023 – £7.4bn
- 2022 – £5.9bn
- 2021 – £6.9bn
In 2024, profits retreated to due to rising regulatory costs, as Lloyds set aside £700m to cover motor finance mis-selling compensation. It’s now set aside £1.95bn in total. Inflation-fuelled increases to operating costs and staff wages also squeezed profits that year.
Lloyds is now almost entirely focused on the UK economy, which is a worry as growth stalls. Rising inflation and interest rates could also hit the property market, hitting mortgage demand. The unemployment rate is rising too, which could trigger a spike in bad debts. Especially if artificial intelligence destroys still more jobs.
Lloyds isn’t as cheap as it was when I bought its shares three years ago. In 2023, the price-to-earnings ratio was below seven. Today it’s 14.2. So there are risks, as there are with every stock. On the other hand, high inflation and interest rates could boost net interest margins, which measure the difference between what banks pay savers and charge borrowers.
Can this FTSE 100 bank still grow?
So what does the future look like? Brokers seem optimistic, with consensus forecasts producing a one-year share price target of 120.6p. If correct, that’s up just over 20% from today’s £1.
Lloyds’ share price growth has knocked dow the trailing yield, which is now just 3.65%. But forecasts are optimistic here, too. They suggest the yield will hit 4.3% this year, and 5.1% in 2027.
Of course, growth forecasts aren’t set in stone. Dividends aren’t guaranteed. A global recession or stock market crash could blow them completely off course. But I think with a long-term view, Lloyds is a brilliant way to generate both dividend income and share price growth. I think it’s well worth considering with a long-term view. Especially if the stock market dips at some point. That would allow investors to get in at a lower valuation, and bag an even higher yield
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Harvey Jones owns shares in Lloyds Banking Group.
