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In my humble opinion, the only way the SP is going to increase dramatically, is for the dividend to increase greatly. Why would the City want to invest millions here for such paltry returns? I have been here for so many years, that I had hair initially, but my investment is still down around £14k. Buy backs I feel, would also be very helpful.
Although operational resilience remains relatively strong, low interest rates and dividend yields are still proving to be problematic for Lloyds share price and across the UK banking sector.
I agree Cornsland that the route to salvation is yield via dividends on a regular and sustainable basis. I am not a fan of buy-backs which have been abused historically by directors to fleece the shareholders e.g. Boeing and American Airlines. I also resent the dilution of capital caused by massive issuance. It is rather like your neighbour encroaching upon your garden. Share divisions and new issuance suit meme tech stocks rather than a dyed in the wool UK high street bank. At least we are seeing blue this morning. Hopefully this will signal a good week! GLA.
I agree Cornsland (as I have written several times here). At the moment the future dividend strategy is uncertain so when and if we get a better picture that would be helpful. Also, are we even sure they will be implementing the "quarterly" dividends??
DividendMax seems to think there will be 4 dividends next year...
se
''At the moment the future dividend strategy is uncertain so when and if we get a better picture that would be helpful.''
Lloyds have a progressive dividend policy - that is a clear enough picture for most.
So without any unforeseen events you should expect a minimum 1.34p final dividend.
Personally I cannot see why the final dividend cannot be greater than that.
Hi Longtime! I agree. Thanks!
The point I was trying to make was that they have previously (pre-covid) signalled they would move from a twice a year dividend policy towards a quarterly or even more frequent strategy. This is interesting to me as it could change the nature of the stock and the type of investors that would buy it. Does anybody have any thoughts on this point??
Cheeeers
Scandi
You are right that is highly possible with economic activity coming back, demand for labour increading, interest rate for sure going up in 2022, housing market always keeps going there is no reason to think otherwise that Lloyds have loads going for it and the current price will not last more long and if anything I say starting from October as we approaching the update this price will move towards above 50p and will stay there. And as I always say we see 60-65p by Christmas if not sooner.
I wanted to know what others think ABOUT the possibility of taking over by larger banks at these crazy level and its effect on share price (depending who take over and to what terms)
I think currently Lloyds could look very attractive to many big player who want access to UK banking markets.
So be interesting to see what everyone think on this ?
Just a theory and have heard this mentioned in few of my interactions with some of the more experience traders I am in touch with.
So open question to everyone!?!
HOLD and you be rewarded massively here
Thanks
GL
Stockready - you raise an interesting issue that I am sure has exercised the minds of a lot of LBG shareholders. All this capital being invested in fintech and new entrant banking when the leading retail bank in the UK is valued at only circa 6.5 times EBITDA. Consider that in the context of small sized acquisitions in Private Equity where a reasonable SME with £2.5m EBITDA will easily attract bids of 8 to 10 times EBITDA. It makes no sense and underlines the fact that LBG is significantly undervalued.
Despite all the noise and bloated valuations around new entrants and fintech one long held principle in retail banking still applies - customer relationships are sticky and getting people to change their bank is hard work. Look under the skin of the new entrants who boast N million accounts and you find that a relatively small fraction of that number represent real change where the customer is using the new entrant as their main bank. So what they have is N million accounts with relatively small deposits and limited activity - in hard commercial terms it means very little.
And the reality of their digital threat doesn't really stand up to scrutiny. LBG has huge embedded scale to leverage any digital investment - get their digital strategy half right and they have significant competitive advantage in a market with sticky client relationships. The competition has to invest so much capital upfront to make any impact only to find they can't keep up with the scale. It's tough on the new entrants but the big guys usually win.
So when I see large operations making moves into UK retail banking it begs the question what will be their customer acquisition cost and where will they be in three years? With the leading player (with huge market share) valued at only 6.5 times EBITDA aren't there more effective ways of entering this market? Obviously any move would trigger a rapid repricing but, working from such a low base, the value argument remains. None of that is rocket science so I would be surprised if the issue wasn't be considered in various boardrooms.
Wandering
Excellent analysis and thanks for taking time to reply
I was thinking on exactly same line of thoughts that you brought up, recently entry to UK banking will be soon learning how tough it is to make people change their banks that is trusted and tested for many years. As you said I am sure this is for sure been discussed in many boardrooms about take over but I truly believe soon they learn they either need to join a collaboration/partnership banking with local giant like Lloyds or take them over to stand a chance of success in the market.
I believe it is not about what you only offer to customers but is about brand, trust and how customer can relate to your name to do business with you.
I think Lloyds is well positioned for success either way but it was just a thought to analyse the hypothetical scenarios... but as you know so well many hypothetical scenarios have become a realities so can be the case here.
Thanks for your interesting post
All the best
Stockready - Agree entirely on the Brand issues. In any normal time LBG would not have been able to acquire the Halifax. The group brand value is huge and again not reflected in the current market price.
We live in very interesting times on LBG and I am more than happy with my holding. In my view the upside possibilities far outweigh and potential downside. And the market has given far too much credence to the new entrant threat - they simply do not understand the nature of retail banking relationships.
Best
WS
Lloyds was mentioned in the contra awarded for a decarbanisation plant at Grimsby, have a look at H&W reports
Governor Andrew Bailey now saying that interest rates rise before the end of the year is looking likely, this is great news for Lloyds investors
thats not exactly what he said livestock
"In a downbeat speech Andrew Bailey cautioned that interest rates will have to rise to tame escalating prices – but stressed the economy is currently too weak to withstand such a move."......
thats very rude livestock and uncalled for...i was just pointing out the full speech and not your selective misleading post...dyor..ignorant person.
So it's the usual we know we must raise it but we cannot raise it..
The UK is obsessed with rising house prices, they will not tolerate a slowdown let alone drop in house prices.
The gov knows that, if house prices drop they will be voted out next election...So this is political too as it's always been. So as always rates won't rise and the usual excuse will be because they can't...
It's unbelievable the damage low rates like these have done. How many people/pensioners have had to put money into equities because they just cannot leave it in a bank account anymore and get some return.
How many pension funds had to basically forget about leaving some of it in cash in the bank...All this cheap cash has further inflated the housing bubble and yes some of it is due to supply but higher interest rates could have kept that in check...
Low interest rates like these is such an unhealthy situation for society in my opinion...The safety of leaving money in the bank is gone, hence equities and houses is so pumped. Yield on buy to let is not that great, there was a time not long ago you could leave your money in the bank and get the same return if not more. Yes you would lose out on the house going up in value but you had a choice...
If this current situation cannot get interest rates back up ie inflation up then perhaps we are all doomed and perhaps then we should all turn to crypto, something I have avoided till now to give central bankers the middle finger and wakeup call they need. Sadly that will probably make it all worse for everyone..
Cheap and excess credit massively distorted the market...Government also cannot afford higher rates and need to inflate theie debt away...Been waiting and waiting for interest rates rises for about 10 years...I should probably start giving up. We all know if they raise it, they won't ever put it back to something meaningful anyway...Rant over...Thanks...x
livestock
Wrong type of inflation for the BoE to consider an interest rise, UK suffering from cost - push inflation i.e. rising wages food costs and higher raw material prices.
Evergrande, inflation returning, interest rate rises, boe guidance, dividend increases. All stories you could copy and paste from the newspapers in 2018. Nothing is going to change, except maybe another pandemic. Gla. Dyor.
Dog
It be compulsory to be gay
Take in a migrant lodger
Falky chancellor exchequer
Eightyeight88
"""thats very rude livestock and uncalled for...i was just pointing out the full speech and not your selective misleading post...dyor..ignorant person"""
Maybe you should get your information from a more reliable source instead of copying and paste from a daily paper and then go around criticizing other people posts
livestock..your obviously not big enough to apologise for your foul and abusive language/post......so are you saying he didnt say this ..."In a downbeat speech Andrew Bailey cautioned that interest rates will have to rise to tame escalating prices – but stressed the economy is currently too weak to withstand such a move.".........
Interest rate rise will be bad for the consumer. The consumer is 70% odd of the economy, so a rate rise flowing through the pipe won't benefit Lloyds. Making money and debt more expensive will light the fuse - The Banksters know this, they are in a position of their own making - in a word screwed.