![\"Young](\"https:\/\/www.europesays.com\/britain\/wp-content\/uploads\/2026\/05\/28868fafa8f7a2748c8156c65f6cff63.jpeg\")
Image source: Getty Images <\/p>\n Image source: Getty Images <\/p>\n
Three years ago today, anyone buying Lloyds\u2018 (LSE: LLOY) shares would have been staring at a 3.75% dividend yield. Not much to sniff at, you might think. After all, the Bank of England (BoE) interest rate went above 5% at one point, which meant putting the cash into a safe-as-houses Cash ISA would have been by far the better investment. Or would it?<\/p>\n
Actually, the basic dividend yield is only one part of the puzzle here. And Lloyds\u2019 shares have been a terrific investment for the last three years in both dividends and share price moves. And an investor prescient enough to reinvest dividends into the stock might now be looking at a yield creeping above the 8% mark. Let me explain.<\/p>\n
The numbers <\/p>\n
The following table contains the details of what would have happened to a \u00a31,000 stake continually reinvested over the period. The calculations are based on historical data, but the exact times of reinvesting the shares might change the numbers a touch.<\/p>\n
Share price<\/p>\n
Dividend paid<\/p>\n
Effective yield<\/p>\n
Stake<\/p>\n
May \u201923<\/p>\n
45p<\/p>\n
\u00a31,000.00<\/p>\n
May \u201924<\/p>\n
55p<\/p>\n
2.76p<\/p>\n
6.13%<\/p>\n
\u00a31,297.19<\/p>\n
May \u201925<\/p>\n
75p<\/p>\n
3.17p<\/p>\n
7.04%<\/p>\n
\u00a31,893.50<\/p>\n
May \u201926<\/p>\n
100p<\/p>\n
3.65p<\/p>\n
8.11%<\/p>\n
\u00a32,729.44<\/p>\n
So what\u2019s going on here? How did the dividend yield jump from less than 4% to above 8%? The ultimate reason is that it\u2019s been a very successful few years for the company. Factors including higher interest rates worked in the bank\u2019s favour and earnings have been growing. The share price more than doubled too.<\/p>\n
Another point is the difference between dividend yield and forward dividend yield. The basic dividend yield tells us what was received in the last 12 months as a percentage. But for budding investors, the forward yield, which gives the next 12 months, is more useful. That\u2019s why the first year was over 6%.<\/p>\n
All told, an investor plumping for Lloyds\u2019 shares three years ago would have nearly tripled their stake. But could it happen again?<\/p>\n
Are Lloyds\u2019 shares a buy? <\/p>\n
There\u2019s cause to believe the events of 2026 have dealt Lloyds a bad hand. The terrible conflict in Iran isn\u2019t having just humanitarian consequences, but it will have worldwide ripples effecting inflation and the global economy. This could be a hammer blow to the banking sector. Lloyds\u2019 share price is down 11% since February and was down 19% at the lowest point.<\/p>\n
There might be one silver lining in this cloud, however. One of the reasons for Lloyds\u2019 recent success has been higher interest rates, which allow more flexibility to increase margins. That the BoE was unable to bring the rate down to the 2% target (because of persistent inflation) has been a boon to banks. Therefore, the talk of interest rate rises due to the war may help while it hinders.<\/p>\n
Only time will tell us for sure whether Lloyds can continue its excellent run. One thing is eternally true however. The dividend yield doesn\u2019t always tell us the earnings potential for investing in a stock. And I wouldn\u2019t be surprised to see a similar run in the future. I think it\u2019s worth considering.<\/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
John Fieldsend owns shares in Lloyds.<\/p>\n
The post \u00a31,000 invested in Lloyds shares 3 years ago is now worth\u2026<\/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 Three years ago today, anyone buying Lloyds\u2018 (LSE: LLOY) shares would have been staring…\n","protected":false},"author":2,"featured_media":49792,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[21256],"tags":[270,22483,3692,2861,5692],"class_list":["post-49791","post","type-post","status-publish","format-standard","has-post-thumbnail","category-lloyds-banking-group","tag-dividend-yield","tag-interest-rate","tag-lloyds","tag-lloyds-banking-group","tag-share-price"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@UnitedKingdom\/116645536915112475","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/49791","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=49791"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/49791\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media\/49792"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media?parent=49791"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/categories?post=49791"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/tags?post=49791"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}