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The Lloyds Banking Group (LSE: LLOY) share price rising in 2025 seemed like the reward long-suffering shareholders had been waiting for.
Except for those of us who were thinking of maybe buying more in the future, that is. We’d hope to buy them as cheaply as possible and offering the best dividend yield.
Well, maybe we just got our wish and a renewed buying opportunity. By market close on 7 April, the Lloyds share price had fallen 14% from its 52-week high.
And that pushed the forecast dividend yield up close to 5% again. It’s at 4.9% at the time of writing on 8 April.
Tariff trouble
The latest fall was kicked off by President Trump’s tariffs, unleashed on 2 April. At first glance, with Lloyds doing no business in the US, we might wonder why extra US import charges would do it any harm at all. In fact, the levies are on goods only, so financial services shouldn’t attract extra costs directly.
The real problem is that the economic fallout might damage banking and finance in general. Lloyds might be entirely UK-focused. But if we’re entering a new global economic slowdown, people feeling the pinch would be less likely to want new mortgages for new homes… and so on.
US Investment bank Goldman Sachs puts the chances of a US recession at 45%, lifted from 35% a week previously. If it happens, the rest of the world really can’t escape it.
What should we do?
Investors have to make decisions they’re comfortable with, and that will vary. But there’s one thing that I definitely don’t think anyone should do, and that’s panic. Panic selling, however, is exactly what’s been happening. And it’s pushed US stock markets into their worst one-week falls since the pandemic.
When that happens, it’s time for long-term investors to consider buying, right? I think so. And I’m in good company, as billionaire investor Warren Buffett recommends buying at those times when “dark clouds will fill the economic skies, and they will briefly rain gold“.
That brings me back to Lloyds, but on its own merits rather than via market-led fear. And if it wasn’t for one thing, I’d be seriously considering buying some more.
Long term
That thing is the car loan mis-selling case currently in progress. And I’m really 50/50 on how I think it might turn out. I seriously fear it could end up costing more than the £1,150m Lloyds has set aside for it. But if it goes better, I might miss out on a buying opportunity now.
That’s the dilemma we always face as long-term investors when short-term things happen. My approach is almost always to wait until the dust settles and make up my mind based on a clearer outlook. And if I miss some extra-cheap buys, I can live with that as it reduces my chances of buying a dud.
I’ll probably buy more Lloyds shares some time in the future. Just not now.
