Until the stock market plunges in February 2020 Lloyds Banking Group (LSE: LLOY) Since 2013, it hasn’t traded at less than 50p. This was considered a useful value indicator. If Lloyds’ stock price is close to 50p, we are happy to buy the stock.
This has all changed in the last 18 months. Lloyds’ stock price fell to 24p last year and approached 50p only once earlier this summer. Now that the stock yield is 5%, we’re digging into whether it’s the right time to buy. This is what I found.
Why are Lloyds’ stocks declining?
Everything looked very good earlier this year. The UK economy recovered faster than expected due to the effects of Covid-19, and the housing market was booming. Lloyds’ financial performance was better than expected. Bank stock prices were steadily rising towards pre-pandemic levels.
But market watchers will know that Lloyds’ stock price has been steadily declining since the beginning of June. After a bit of a touch of 50p, the market share fell 10% to about 45p.
What’s wrong? There really is nothing. The problem is that city analysts expect bank profits to peak at £ 5.2bn this year and fall to around £ 4.2bn in 2022 and 2023.
I’m always looking forward to the stock market. If a company’s profits are expected to decline, the stock may be valued cheaply by investors. I think that’s what happened here. Lloyds shares are currently Book value And in a multiple of exactly six times the projected revenue for 2021.
This may be a bargain
It is worth noting that while Lloyds’ profits are expected to decline, analysts still expect steady dividend growth. This seems to make sense to me — banks have enough surplus capital and their current payments are about three times more covered by earnings. There is room for growth.
As a result, I think Lloyds could be a good income play at the current level. If the broker’s forecast is correct, anyone who buys Lloyds shares at the current price could reach a dividend yield of 6% in 2023.
The market wants to grow
Meanwhile, the new CEO Charlie Nan We focus on two key areas to generate growth and improve profitability. The first is asset management. Sell asset management services to wealthy individuals. The second is a more dramatic change. Lloyds aims to be one of the UK’s largest residential landowners, building and renting up to 50,000 homes.
I agree that renting real estate can generate higher returns than mortgages, but I think this strategy also carries some risks. If Lloyd’s real estate sector fails to provide excellent service, it can undermine the bank’s widespread reputation with consumers.
Lloyds Stock Price: Buy, Sell, or Hold?
There are concerns about Lloyd’s real estate ambitions, but I think this is a fairly safe investment overall.
Profit is expected to fall next year, but I think Lloyds will improve over time. In the meantime, I want to settle down and pocket the bank’s generous 5% dividend yield.
Overall, I think Lloyd’s share price will once again exceed 50p. The stock is trading below this level, so it would be great if you could buy this stock for your portfolio.
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Roland head There are no positions in any of the listed shares. The Motley Fool UK recommends the Lloyds Banking Group. The views expressed about the companies mentioned in this article are those of the author and may differ from the official recommendations made by subscription services such as Share Advisor, Hidden Winners, and Pro. Here at The Motley Fool, by examining different insights, Better investors than us.
Will Lloyds’ stock price exceed 50p again?
https://www.fool.co.uk/investing/2021/09/19/will-the-lloyds-share-price-ever-rise-above-50p-again/ Will Lloyds’ stock price exceed 50p again?