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Image source: Getty Images <\/p>\n Image source: Getty Images <\/p>\n
Lloyds\u2018 (LSE: LLOY) shares have enjoyed strong dividend growth since Covid and now boasts a decent track record. They suffered a sharp cut in 2020 but weren\u2019t paused, and the annual payout has now recovered from 2p to 3.65p.<\/p>\n
But the dividend yield, after peaking above 6% in 2023, has dropped back to 3.8% at today\u2019s share price. That\u2019s barely above the FTSE 100 average.<\/p>\n
So how does it compare to other income-focused UK banks?<\/p>\n
Tough competition <\/p>\n
While I think Lloyds still has appeal, it\u2019s not quite what it used to be. Encouragingly, analysts expect the dividend to rise to 5.9p per share by 2028, which could push the yield above 6% again.<\/p>\n
But with NatWest and HSBC already offering stronger yields, what\u2019s the most attractive option right now?<\/p>\n
When comparing dividend forecasts, the three banks start to look quite different:<\/p>\n
Bank<\/p>\n
2025 dividend<\/p>\n
2028 expected dividend<\/p>\n
Yield at today\u2019s price<\/p>\n
Lloyds<\/p>\n
3.65p<\/p>\n
5.9p<\/p>\n
above 6% forecast<\/p>\n
HSBC<\/p>\n
75c<\/p>\n
$1+<\/p>\n
5.7%<\/p>\n
NatWest<\/p>\n
32.5p<\/p>\n
44p<\/p>\n
7.8%<\/p>\n
HSBC paid a 75c full-year dividend in 2025 and is expected to lift that to over $1 by 2028. On current prices, that would mean a 5.7% yield.<\/p>\n
Earnings per share (EPS) are also forecast to climb sharply, from $1.20 to $1.95, which would give the dividend decent cover.<\/p>\n
NatWest looks even more attractive on pure income. It paid 32.5p a share in 2025 and is expected to increase that to 44p by 2028. On today\u2019s share price, that works out at a 7.8% yield. Plus, EPS is forecast to rise from 67p to 86p, so the payout should remain reasonably supported.<\/p>\n
For an income investor, those numbers are hard to ignore. But, of course, the yield\u2019s only half the story.<\/p>\n
Risk comparison <\/p>\n
Shopping for yield without assessing risk is like buying a fast car without checking the brakes. Both could end in tears.<\/p>\n
Lloyds carries the clearest domestic risk, being heavily exposed to the UK economy and housing market. A sharp downturn or weakening property market could notably impact profits. Plus, there\u2019s the ongoing motor-finance scandal. It\u2019s already put aside \u00a31.95bn for the redress, but the final bill could be even higher.<\/p>\n
So while Lloyds is arguably the most popular bank among UK investors, it\u2019s far from risk-free.<\/p>\n
HSBC carries more international risk, in particular its Asia and China exposure, plus the Hang Seng privatisation. That gives it more diversification, but also more moving parts to watch.<\/p>\n
NatWest sits somewhere in the middle. It\u2019s still closely tied to the UK mortgage market and broader credit cycle, but doesn\u2019t have the same exposure as Lloyds.<\/p>\n
So what\u2019s the verdict? <\/p>\n
My view\u2019s simple. NatWest looks the most appealing for pure income because it combines the highest forecast yield with a relatively straightforward risk profile.<\/p>\n
Lloyds has the long-term reliability many investors like, while HSBC may suit those who want diversification.<\/p>\n
In the end, all three have unique attributes that are worth a closer look, depending on whether you value income, safety, or a mix of both.<\/p>\n
Should you invest \u00a35,000 in Lloyds Banking Group Plc right now? <\/p>\n
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.<\/p>\n
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Lloyds Banking Group Plc made the list?<\/p>\n
See The Six Stocks<\/p>\n
Mark Hartley owns shares in Lloyds Banking Group and HSBC Holdings.<\/p>\n
The post Here\u2019s how Lloyds shares compare to top UK banks for dividend income<\/a> appeared first on The Twelfth Magpie<\/a>.<\/p>\n More reading<\/p>\n Motley Fool UK 2026<\/p>\n","protected":false},"excerpt":{"rendered":"Image source: Getty Images Lloyds\u2018 (LSE: LLOY) shares have enjoyed strong dividend growth since Covid and now boasts…\n","protected":false},"author":2,"featured_media":42451,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[21256],"tags":[22478,22741,270,9881,3692,2861,20306,3693,7955,5692,5],"class_list":["post-46412","post","type-post","status-publish","format-standard","has-post-thumbnail","category-lloyds-banking-group","tag-dividend-growth","tag-dividend-income","tag-dividend-yield","tag-hsbc","tag-lloyds","tag-lloyds-banking-group","tag-lloyds-banking-group-plc","tag-lloyds-shares","tag-natwest","tag-share-price","tag-uk"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@UnitedKingdom\/116622758209438137","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/46412","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=46412"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/46412\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media\/42451"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media?parent=46412"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/categories?post=46412"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/tags?post=46412"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}