£10k invested in sizzling Barclays, Lloyds and NatWest shares 1 year ago is now worth…
NatWest (LSE: NWG) shares have enjoyed another smashing year, rising 55% in the last 12 months. Over five years, theyâre up an incredible 265%, with dividends on top. Can this fabulous run continue into 2026?
I could ask the same question about two other FTSE 100 banks: Barclays (LSE: BARC) and Lloyds Banking Group (LSE: LLOY), because they’ve been sizzling too.
Red-hot FTSE 100 sector
The Barclays share price is up 67% this year and 212% over five. Lloyds’ shares, which I own, have done even better, rising 72% over the last 12 months, although it’s playing catch-up after lagging in 2024. Over five years, Lloyds’ shares are up 161%. Again, all dividends come on top.
Itâs taken a long time to get here. All three banks were hammered by the financial crisis and took more than a decade to piece themselves back together. Many Britons still havenât forgiven or forgotten the bailouts, and there are regular calls for windfall taxes on profits. The sector already pays a 3% surcharge.
From an investment point of view though, theyâre doing brilliantly. With dividends restored and profits booming, investors have piled back in.
NatWest posted an operating profit of £6.2bn in 2024 and rewarded shareholders with a 26% dividend hike. The remaining taxpayer stake has now been cleared, giving the shares another lift.
On 25 July, first-half results showed further progress. NatWest added 1.1m new customers, earnings per share jumped 28%, and the board felt confident enough to approve a £750m share buyback. The interim dividend was lifted 58% to 9.5p per share.
The board plans to return around half of attributable profit as ordinary dividends, with buybacks on top where appropriate. The forecast yield for full-year 2025 is 5.05%, rising to 5.48% in 2026. With a trailing price-to-earnings ratio just over 12, the shares still look reasonably priced.
Buybacks, income and growth
Barclays has a similar story to tell. In 2024, it made a pre-tax profit of £8.1bn, up 24% year on year, and returned £3bn to shareholders, alongside announcing a fresh £1bn buyback. The trailing dividend yield is lower at 1.86%, but the board plans to focus more on buybacks. The P/E is also around 12.
Profits at Lloyds dipped 19% in 2024 to £4.5bn, largely due to a £1.15bn provision for motor finance mis-selling. A proposed £1.7bn buyback soon cheered investors. Lloyds is the priciest of the three on a P/E of 15, while the trailing yield has slipped to 3.35% as the share price has surged. The latest interim dividend was hiked by 15%, and buybacks should keep the investor rewards flowing.
£10,000 in NatWest a year ago would have seen a total return of 59.37%, including dividends, turning it into £15,937. Barclays would have turned £10k into £16,851, while Lloyds would have delivered £17,492, helped by that catch-up rally.
These are stellar returns, but investors can’t expect to see that kind of performance every year. 2026 could be bumpier, especially if markets crash or a global recession hits. Falling interest rates are also likely to squeeze net interest margins and profits.
Even so, all three still look worth considering with a long-term view, as long as investors temper their expectations. If markets dip, they could look irresistible.
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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.
