Why hasn’t the Lloyds share price hit £1 yet?
It’s been a roller-coaster year for shares, with the FTSE 100 hitting a record high before slumping steeply. The same goes for British bank stocks, which have zigzagged over 12 months. And the Lloyds Banking Group (LSE: LLOY) share price has been no exception.
Lloyds lifts above 70p again
At the height of last summer, the Lloyds share price was looking limp. On 14 August 2024, it hit a 52-week low of 47.43p before rebounding. The shares have risen strongly since their summer lull, peaking at 74.46p on 6 March.
But market jitters triggered by President Trump’s trade tariffs sent global stocks sharply south, with Lloyds caught in this storm. On Monday, 7 April, the shares closed at 64.02p, but have bounced back after the suspension of US tariffs for 90 days.
As I write, shares in the Black Horse bank stand at 70.34p, within 5.5% of their 2025 high. This means the group is valued at £42.4bn. Furthermore, this FTSE 100 stock is up 14.9% over six months and 41.3% over one year. Even better, the shares have soared by 131% over five years, as markets recovered following the Covid-19 crisis.
The above gains exclude cash dividends, which are fairly generous from Lloyds and other British banks. Indeed, Lloyds shares currently produce a dividend yield of 4.5% a year, ahead of the Footsie‘s cash yield of roughly 3.5% a year.
When will Lloyds hit £1?
While this stock has enjoyed a good half-decade, it is well short of the psychologically attractive £1 milestone. To clear this hurdle, Lloyds shares would need to rise a further 42.2%, which is not beyond the realms of possibility.
One factor to consider is that UK bank stocks imploded spectacularly during the global financial crisis of 2007-09. Indeed, Lloyds only survived thanks to a £20.3bn government bailout. In return for this taxpayer cash, the government ended up with a 43% stake in Lloyds that took many years to sell.
Lloyds shares have endured other crashes, including a sharp sell-off during the market meltdown in spring 2020 caused by the Covid-19 emergency. Thus, investors know that bank shares aren’t as safe as once perceived to be, which might have limited their upside.
Another possible reason for the inability of Lloyds shares to clear the £1 mark is that they don’t look particularly cheap right now. Today, they trade on a multiple of 11.3 times trailing earnings, producing an earnings yield of 8.8%. Therefore, their dividend yield of 4.5% a year is covered almost twice by historic earnings.
Though these fundamentals look undemanding, Lloyds shares have offered much better value in recent years. For example, when my wife and I bought them in late June 2022, we paid 43.5p a share for our holding.
Back then, Lloyds’ price-to-earnings ratio was in single digits and its dividend yield was several percentage points higher. To me, Lloyds looked a steal in mid-2022 — and the shares have since leapt by 61.7%, with dividends as an added bonus.
In summary, Lloyds shares have yet to hit £1 because it’s quite simply too early for this breakthrough. That said, I reckon they might hit this mark within, say, the next 24 months — barring more market meltdowns, that is!
The post Why hasn’t the Lloyds share price hit £1 yet? appeared first on The Motley Fool UK.
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More reading
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The Motley Fool UK has recommended Lloyds Banking Group. Cliff D’Arcy has an economic interest in Lloyds Banking Group shares. 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.
