Check out the latest dividend forecasts for NatWest, Lloyds and Barclays shares
Barclays‘ (LSE: BARC) shares have been on a storming run, as have those for NatWest Group and Lloyds Banking Group. Itâs been a great time to hold the FTSE 100 banks, although investors needed to be patient after years of struggle.
Over the past 12 months, Barclays is up 65% and almost 250% over five years. NatWest isnât far behind, gaining 60% in one year and an incredible 360% over five. Lloyds is the laggard but is still up 43% and 197% across the same timeframes. Throw reinvested dividends into the mix and their total returns are even stronger.
Asia-focused HSBC Holdings and Standard Chartered have also thrived, lifted by the same wave of confidence that swept across the sector early last year. Banks are throwing off cash, trading on modest valuations and rewarding shareholders through both dividends and share buybacks.
Barclays sets the pace
Barclays’ 2024 results (13 February) demonstrate why investors are so happy. It posted a 24% increase in profit before tax to £8.1bn, with a 10.5% return on tangible equity.
It’s also rewarded shareholders with £3bn of distributions, which included a £1.8bn share buyback and plans for a further £1bn. Management said it remains on course to deliver at least £10bn of capital returns by 2026, including dividends.
This momentum continued into the first quarter. On 30 April, management reiterated full-year targets and raised 2025 income guidance to more than £12.5bn.
However, the trailing dividend yield is now a disappointing 2.24%. That’s well below 3.87% at Lloyds, and 3.77% at NatWest. All three have fallen, but that’s purely down to their rocketing share prices. Barclays is relatively lower because it prefers buybacks to dividends. The former may boost earnings per share but I prefer to see cash in my account. It’s a personal thing. Investors have to make their own decisions.
Comparing yields
As my table shows, NatWest offers the most promising dividend outlook. This year, investors can anticipate a yield of 5.34%, rising to 5.96% in 2026. These are forecasts, of course, they aren’t set in stone.
| P/E ratio | Trailing yield | 2025 forecast yield | 2026 forecast yield | |
| Barclays | 10.35 | 2.24% | 2.42% | 2.69% |
| Lloyds | 13.25 | 3.87% | 4.24% | 4.96% |
| NatWest | 10.55 | 3.77% | 5.34% | 5.96% |
Valuations remain appealing. As my table also shows, Barclays and NatWest are trading on price-to-earnings ratios of just over 10, with Lloyds pricier at 13.25.
Risks remain
There are always risks in banking. They didn’t end with the financial crisis. The Financial Conduct Authority fined Barclays £42m in July for lapses in its crime controls, while Lloyds narrowly avoided serious fallout from the motor finance scandal.
Today’s sticky inflation could keep net interest margins high, which helps profits, but it may also hit demand for mortgages and drive up loan defaults. Barclaysâ US exposure via its investment banking arm could hurt if the economy slows stateside. Although it could boost the bank in good times.
Lloyds remains a reliable retail-focused operator, while NatWest offers the juiciest yield. With patience and a long-term approach, all three could reward investors. For pure income seekers, NatWest looks the most attractive to think about today, but I feel investors might also consider buying Barclays or Lloyds.
The post Check out the latest dividend forecasts for NatWest, Lloyds and Barclays shares appeared first on The Motley Fool UK.
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Harvey Jones has positions in Lloyds Banking Group Plc. The Motley Fool UK has recommended Barclays Plc 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.
