Assessing the Sustainability and Growth of Lloyds Banking Group PLC's Dividends
Lloyds Banking Group PLC (LYG, Financial) recently announced a dividend of $0.09 per share, payable on 2024-05-31, with the ex-dividend date set for 2024-04-11. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Lloyds Banking Group PLC's dividend performance and assess its sustainability.
What Does Lloyds Banking Group PLC Do?
Lloyds Banking Group PLC is a retail and commercial bank headquartered in the United Kingdom. The bank operates via three business segments: retail, commercial banking, and insurance and wealth. In retail, Lloyds offers primarily mortgages (66% of loan portfolio), credit cards, and current accounts to its customers. Its commercial banking operation provides lending, transaction banking, working capital management, and debt capital market services to large corporates and financial institutions in the U.K. Insurance and wealth rounds out the product lineup with life and property insurance as well as pension solutions and high-net-worth asset-management services.
A Glimpse at Lloyds Banking Group PLC's Dividend History
Lloyds Banking Group PLC has maintained a consistent dividend payment record since 2021. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Lloyds Banking Group PLC's Dividend Yield and Growth
As of today, Lloyds Banking Group PLC currently has a 12-month trailing dividend yield of 4.66% and a 12-month forward dividend yield of 5.27%. This suggests an expectation of increase in dividend payments over the next 12 months. Based on Lloyds Banking Group PLC's dividend yield and five-year growth rate, the 5-year yield on cost of Lloyds Banking Group PLC stock as of today is approximately 4.66%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-12-31, Lloyds Banking Group PLC's dividend payout ratio is 0.31, which is considered healthy and sustainable.
Lloyds Banking Group PLC's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Lloyds Banking Group PLC's profitability 5 out of 10 as of 2023-12-31, suggesting fair profitability. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Lloyds Banking Group PLC's growth rank of 5 out of 10 suggests that the company has a fair growth outlook. Revenue is the lifeblood of any company, and Lloyds Banking Group PLC's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Lloyds Banking Group PLC's revenue has increased by approximately 11.30% per year on average, a rate that outperforms approximately 67.75% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Lloyds Banking Group PLC's earnings increased by approximately 72.40% per year on average, a rate that outperforms approximately 94.76% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 16.30%, which outperforms approximately 76.49% of global competitors.
Next Steps
In conclusion, Lloyds Banking Group PLC's upcoming dividend payment reflects its commitment to returning value to shareholders. The company's dividend growth rate, payout ratio, profitability, and growth metrics paint a picture of a financial institution that is not only managing its resources wisely but also positioning itself for future success. As value investors consider the potential of Lloyds Banking Group PLC as an income-generating investment, the combination of a healthy payout ratio, consistent profitability, and positive growth trends signal a promising outlook for the bank's dividend sustainability. Whether you're looking to expand your portfolio with dividend-paying stocks or seeking to understand the financial health of Lloyds Banking Group PLC, the analysis of these key factors provides a solid foundation for informed decision-making. For those interested in further exploring high-dividend yield opportunities, GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
