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Image source: Getty Images <\/p>\n Image source: Getty Images <\/p>\n
Lloyds\u2019 (LSE :LLOY)\u00a0shares are trading at 95.8p, making them the only major UK bank stock selling for less than a quid. But does the low price represent good value and, more importantly, are they the best option for passive income?<\/p>\n
At first glance, Lloyds looks appealing. A dividend yield of 3.71% beats most savings accounts, and a price-to-earnings (P\/E) ratio of 12.22 suggests it isn\u2019t overpriced.<\/p>\n
For a UK-focused bank with a simple business model, that can feel reassuring. But income investors rarely look at one stock in isolation.<\/p>\n
How much income could Lloyds actually deliver? <\/p>\n
If you invested \u00a310,000, a 3.71% yield would generate around \u00a3371 a year in dividends, assuming payouts remain stable. That\u2019s a decent baseline, especially for a bank often seen as a barometer of the UK economy.<\/p>\n
But it\u2019s a bit lacklustre compared to the type of returns most passive income investors target. On the plus side, it\u2019s sufficiently covered by earnings, growing 9% year-on-year (yoy), and backed by the reliability of a well-established bank<\/p>\n
To sum it up, Lloyds offers consistency, but not standout income or growth.<\/p>\n
Is there better value among FTSE 100 banks? <\/p>\n
Looking across the sector, a few rivals offer more compelling numbers.<\/p>\n
Bank<\/p>\n
Yield<\/p>\n
P\/E Ratio<\/p>\n
Earnings growth (yoy)<\/p>\n
Notable Point<\/p>\n
Lloyds<\/p>\n
3.71%<\/p>\n
12.22<\/p>\n
9%<\/p>\n
UK-focused, low share price.<\/p>\n
NatWest<\/p>\n
5.59%<\/p>\n
8.16<\/p>\n
19.76%<\/p>\n
Highest yield, strongest value.<\/p>\n
Barclays<\/p>\n
2%<\/p>\n
9.27<\/p>\n
15.64%<\/p>\n
42-year dividend record.<\/p>\n
HSBC<\/p>\n
4.23%<\/p>\n
14.78<\/p>\n
6.33%<\/p>\n
Price up 203% in five years.<\/p>\n
NatWest clearly stands out for income and value. A 5.59% yield is significantly higher than Lloyds, and its lower P\/E ratio suggests the shares may be undervalued. Add earnings growth of 19.76%, and it looks attractive.<\/p>\n
However, the share price is down 13% this year, and its eight-year dividend track record is relatively short.<\/p>\n
Barclays sits at the opposite end. The yield is just 2%, but it has paid dividends for 42 consecutive years. For cautious investors, reliability matters.<\/p>\n
HSBC offers a middle ground. Its 4.23% yield is solid, and its global footprint provides diversification. The share price has climbed 203% over five years, which highlights its growth credentials.<\/p>\n
What should income investors focus on? <\/p>\n
When choosing between these banks, it helps to weigh a few key factors:<\/p>\n
Dividend yield: higher yields boost income but can signal risk.<\/p>\n
Valuation: lower P\/E ratios may indicate better value.<\/p>\n
Reliability: long dividend histories reduce uncertainty.<\/p>\n
Growth: rising earnings support future payouts.<\/p>\n
For income and value investors, NatWest looks a clear winner. But with a weakening price and only an eight-year payment record, it lacks the long-term reliability of Barclays. And HSBC\u2019s global diversification and strong share price performance make it appealing for a mix of income and growth.<\/p>\n
So long story short. For high-yield dividend hunters, NatWest deserves a closer look. From a defensive point of view, both Barclays and HSBC could help quell volatility over the long term.<\/p>\n
Lloyds meanwhile, remains a dependable option. It\u2019s often viewed as a bellwether for the UK market, making it a good foundational stock to consider in any portfolio.<\/p>\n
The post Under \u00a31, Lloyds shares are the cheapest of UK banks. But are they the right choice for passive income?<\/a> appeared first on The Twelfth Magpie<\/a>.<\/p>\n More reading<\/p>\n HSBC Holdings is an advertising partner of Motley Fool Money. Mark Hartley has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays Plc, HSBC Holdings, and Lloyds Banking Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.<\/a><\/p>\n Motley Fool UK 2026<\/p>\n","protected":false},"excerpt":{"rendered":"Image source: Getty Images Lloyds\u2019 (LSE :LLOY)\u00a0shares are trading at 95.8p, making them the only major UK bank…\n","protected":false},"author":2,"featured_media":37867,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[273,9881,3692,3693,5691,5692,5,431,6],"class_list":{"0":"post-37866","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-uk","8":"tag-earnings-growth","9":"tag-hsbc","10":"tag-lloyds","11":"tag-lloyds-shares","12":"tag-passive-income","13":"tag-share-price","14":"tag-uk","15":"tag-uk-economy","16":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@UnitedKingdom\/116583401037839651","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/37866","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=37866"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/37866\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media\/37867"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media?parent=37866"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/categories?post=37866"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/tags?post=37866"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}