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So far, 2025 has been a good year for British banks. For example, the Lloyds Banking Group (LSE: LLOY) share price has soared since end-2024, recording one of its best winning streaks in years.
On Friday, 23 May, Lloyds shares hit a new 52-week high of 78.98p, before slipping back. This Black Horse bank is currently valued at around £46.6bn, making it a FTSE 100 powerhouse.
The share price surge
When I started working in the City of London, my first mentor told me: “The only action is price action.” In other words, the most important thing when looking at investments — either potential or already owned — is current prices and the movements thereof.
The Lloyds share price has certainly seen some positive price momentum of late. Here’s how this popular and widely held stock has gained in value over eight timescales:
| One week | +5.0% |
| One month | +10.1% |
| Three months | +16.8% |
| Six months | +44.2% |
| One year | +39.2% |
| Two years | +67.2% |
| Three years | +80.0% |
| Five years | +179.1% |
My table shows that Lloyds shares have risen in value over all eight periods, ranging from one week to five years. That’s good news for patient shareholders (including my family).
When this stock was a bargain
My wife and I bought Lloyds shares as a value/income/dividend play in late June 2022, paying 43.5p a share for our holding. Back then, this Footsie stock looked unmissably cheap to me, so we snapped it up. Using the current share price of 77.74p, our paper gain now stands at 78.7% — not bad for a ‘boring’ bank stock.
But that’s not all. The above returns exclude cash dividends, which Lloyds pays out generously. From 2021 to 2024, this stock’s yearly dividend climbed from 2p a share to 3.17p. This amounts to a 58.5% increase in three years.
However, after this run of share-price rises, this FTSE 100 stock no longer looks outstandingly cheap to me. It trades at a multiple of 12.6 times trailing earnings, producing an earnings yield of 7.9%. The dividend yield has dropped to 4.1% year — admittedly ahead of the Footsie’s yearly cash yield of 3.7%. Also, this payout is covered 1.9 times by historic earnings, which is a solid margin of safety.
Will I buy today?
Having already acquired Lloyds shares at a bargain price, I see no compelling reason to increase the size of our holding.
Then again, we have no interest in selling our existing shares at current price levels. Ideally, I’ll hold off until this stock clears £1 before reviewing our position, but that might be a long wait. Furthermore, this stock could still be worth considering by investors seeking stocks with above-average dividend yields, backed by rising cash payouts, share buybacks and strong price momentum.
Lastly, various economic indicators look fine for British banks, including low unemployment, a growing economy, modest loan losses and gentle credit growth. And with interest rates being held higher for longer, this boosts Lloyds’ net interest margin and earnings. In short, I shall sit back, hold tight and await developments!
