Despite a background of uncertainty \u2014 both abroad and at home \u2014 Lloyds’ (LSE:LLOY) shares continue to go from strength to strength. The shares are up about 45% over the past 12 months, trading near 115p \u2014 near their highest levels in a decade. <\/p>\n
At first glance, that might suggest the easy money has already been made. But digging into the latest results suggest there could still be reasons for optimism. <\/p>\n
Dividend growth and buyback momentum <\/p>\n
The real story behind Lloyds’ recent performance lies in its capital returns. In late July, the bank reported a 23% rise in half-year profit to \u00a34.29bn and announced a 30% increase in its interim dividend to 1.58p per share.\u00a0 Alongside this, management announced a fresh \u00a31bn share buyback programme, adding to the \u00a31.75bn already in play. <\/p>\n
For income-focused investors, this combination’s compelling. If the final dividend’s also boosted by 30%, the full-year dividend could reach 4.74p. At 115p, that’s a prospective yield above 4.12% \u2014 before accounting for buybacks. <\/p>\n
When shares are cancelled, earnings per share (EPS) rise, which can support future dividend growth and potentially lift the share price further. <\/p>\n
So even despite the recent growth, some analysts still envision total returns of up to 15% in the next 12 months. But only if execution continues and the macro environment stays stable. <\/p>\n
The bank’s ‘Accelerate 2030’ strategy targets mid-single-digit income growth and around 20% return on tangible equity (RoTE) by the end of the decade (up from 17.1% in H1 2026). But is that enough to justify the risks? <\/p>\n
Risks to watch <\/p>\n
Lloyds doesn’t operate in a vacuum. The UK banking sector faces several headwinds that could temper enthusiasm. First, there’s the question of net interest margins (NIM). If the Bank of England cuts rates faster than expected, Lloyds’ 3.19% NIM could compress, squeezing profitability. <\/p>\n
Second, credit risk remains a concern. While impairments have been manageable so far, a deterioration in the UK economy, higher unemployment, or falling house prices could lead to higher loan losses. Lloyds’ heavy exposure to UK mortgages and consumer lending makes it particularly sensitive to domestic conditions. <\/p>\n
Third, there’s political and regulatory risk. The UK government has shown willingness to impose windfall taxes on banks, and increased scrutiny on pricing and customer treatment could add costs. Recent technical issues affecting customer accounts also highlight operational risks that can dent confidence. <\/p>\n
Given these challenges, does Lloyds still deserve a place in a long-term portfolio? <\/p>\n
Looking ahead <\/p>\n
All things considered, I don’t believe the risks outweigh the potential for Lloyds \u2014 particularly when thinking long-term. The bank has proven resilient even during tougher times than these. <\/p>\n
It offers an increasingly attractive mix of income, capital return, and exposure to the UK economy at a reasonable valuation. The 30% dividend hike and ongoing buybacks signal management confidence, while the bank’s strong capital position (CET1 ratio of 13.6%) provides a buffer against shocks. <\/p>\n
I believe there’s still a strong argument to consider Lloyds as a foundational holding in a diversified portfolio. But it’s not the only one \u2014 when it comes to income, one other stock caught my attention lately\u2026 <\/p>\n
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Mark Hartley owns shares in Lloyds Banking Group. <\/p>\n
The post After a 30% dividend hike (and buybacks), do Lloyds shares deserve another look?<\/a> appeared first on The Twelfth Magpie<\/a>. <\/p>\n More reading <\/p>\n The Twelfth Magpie 2026 <\/p>\n","protected":false},"excerpt":{"rendered":"Despite a background of uncertainty \u2014 both abroad and at home \u2014 Lloyds’ (LSE:LLOY) shares continue to go…\n","protected":false},"author":2,"featured_media":104008,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[21256],"tags":[22478,24014,3692,2861,21054],"class_list":["post-106996","post","type-post","status-publish","format-standard","has-post-thumbnail","category-lloyds-banking-group","tag-dividend-growth","tag-interim-dividend","tag-lloyds","tag-lloyds-banking-group","tag-share-buyback"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@UnitedKingdom\/117124442529355444","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/106996","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/comments?post=106996"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/106996\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media\/104008"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media?parent=106996"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/categories?post=106996"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/tags?post=106996"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}