Regardless of money returns being minimize through the Covid-19 pandemic, Lloyds shares stay extremely standard with these UK traders trying to generate passive revenue from their portfolios.

So how a lot may I obtain from investing, say, my full Shares and Shares ISA allowance — £20,000 — within the firm?

Let’s discover out.

Chunky dividends

On the present share price, the banking big has a dividend yield of 5.3% for FY24, rising to five.5% in FY25.

Out of curiosity, each are way over I’d get from holding a FTSE 100 tracker. That’s one thing I at all times search for when contemplating whether or not shopping for inventory in a single firm is price the additional danger concerned. Based mostly simply on these numbers, that’s a pleasant tick within the field to kick issues off.

Utilizing the latter share, investing £20k would generate £1,100 in that monetary yr!

That’s a chunky sum. And if I can reinvest that form of cash over a few years, the miracle that’s compounding may go away me with a really good pot to get pleasure from in retirement.

Would I really get the money?

As most revenue traders rapidly study, dividends are by no means assured. And whereas we will’t predict the long run with any certainty, it is sensible to have a look at how buying and selling’s going earlier than clicking the Purchase button.

It’s honest to say that final week’s Q3 replace (23 October) didn’t precisely set hearts aflutter. Pre-tax revenue for the primary 9 months of the yr got here in at £3.93bn, due partly to increased working bills. That’s 27% beneath the determine hit over the identical interval in 2023.

But it surely’s price noting that the share price has barely moved since. So the market appeared fairly glad (or a minimum of not shocked) by these numbers.

Individually, the consensus amongst analysts is that Lloyds’ FY25 dividends will nonetheless be coated over twice by anticipated revenue. That’s the type of buffer I search for.

Maintain your horses!

The concept of throwing my whole annual allowance at a single enterprise is enjoyable as a thought train. But it surely’s most unlikely I’d do that in actual life.

The difficulty is, nobody really is aware of what’s across the nook. And that is significantly the case on the subject of something remotely linked to the cyclical monetary sector.

Put one other method, Lloyds may execute brilliantly from right here however nonetheless be dragged down by extra basic financial developments. For instance, the gradual reducing of rates of interest could also be excellent news for debtors.

Nevertheless, it should put stress on the financial institution’s web curiosity margin. And with subsequent week’s price range firmly in focus, who is aware of whether or not the shares will be capable of hold on to the near-30% achieve seen in 2024 to date. In any case, the financial institution’s closely depending on revenue from these shores.

Too robust for me

With a blindfold on and only some numbers to go by, I’d ponder shopping for this inventory as a part of a diversified portfolio.

Blindfold off, it’s a distinct story. Considering the complexity of Lloyds as a enterprise and the still-rather-fragile UK economic system, I’d moderately prioritise shares the place earnings are extra predictable.

If this implies receiving a smaller quantity of passive revenue in consequence, so be it!