REPORTED IN MARCH RE DIVIDENDS & BUYBACKS18 May 2019 21:40
In 2015, Lloyds returned £2bn to shareholders through dividend payments. By 2018, this figure had doubled to about £4bn, made up of £2.3bn in dividends and £1.75bn of share buybacks.
What does this mean for shareholders? For the second year running, chief executive António Horta-Osório has opted to use some of the group’s surplus cash to reduce its share count.
For shareholders, the benefit should be that earnings per share rise more quickly, because profits are split among fewer shares. Last year’s £1bn buyback repurchased 1.6bn shares. I estimate that this year’s £1.75bn buyback could involve about 2.65bn shares.
Given that the bank has about 71.2bn shares at the time of writing, this year’s buyback alone should reduce the total share count by about 3.7%. However, I think the real reduction will probably be a little lower than this.