International inventory markets could also be rattled however the Lloyds (LSE: LLOY) share price has been admirably agency. In reality, it’s quietly having a strong run.

Over the previous 12 months, Lloyds shares are up greater than 40%. Stretch that to 5 years and so they’ve greater than doubled, rising 110%. All dividends are on high.

That may come as a nice shock to traders who recall the lengthy slog that adopted the monetary disaster. So is the FTSE 100 financial institution turning into the dependable dividend progress machine of yore?

It’s not with out threat. Banks stay uncovered to the broader financial cycle, and their very own missteps. Lloyds trailed final 12 months’s banking rally, as worries mounted over a possible £3bn invoice from a motor finance mis-selling scandal. That challenge hasn’t gone away, however not appears to be entrance of thoughts for traders.

Rewarding shareholders

The group’s full-year 2024 ends in February helped flip the temper as Lloyds introduced £3.6bn in whole shareholder distributions and gave reassurance that asset high quality stays sturdy.

The ultimate quarter of 2024 noticed internet curiosity earnings rise barely to £3.3bn, as margins edged up to 2.97%.

Regardless of all the difficulty over commerce tariffs, Lloyds shares have risen a strong 17% during the last three months, and held flat over the previous month. On the time of writing, they commerce at 11.6 instances earnings. That’s cheap, although not a cut price. The price-to-book ratio now sits at precisely one. This means they’re absolutely and pretty valued however not low-cost. Final 12 months, the P/B ratio was simply 0.6.

Lengthy-term view

There is probably not a lot in the best way of short-term positive aspects from right here. However over the long term, the image nonetheless appears to be like optimistic. Decrease rates of interest would squeeze internet curiosity margins, however may additionally carry advantages.

Cheaper borrowing helps the housing market, reduces dangerous money owed, and boosts mortgage demand. Lloyds, via Halifax, remains to be the UK’s greatest mortgage lender.

Dealer forecasts counsel group working margins might bounce from 17.4% to 41.7% this 12 months. If that proves appropriate, it will mark a big step ahead. So would the forecast earnings increase of £1.5bn from strategic initiatives by 2026.

The trailing yield of 4.4% has fallen because the share price climbs, however stays comfortably above the FTSE 100 common of three.5%. Lloyds is forecast to yield 5.1% this 12 months, properly coated by earnings at 2.1 instances.

Constructive outlook

The 17 analysts providing one-year share price targets have settled on a median of 78.4p. If that performs out, it will mark a 9% acquire from at the moment’s 71.9p. Mixed with the yield, that’s a complete return of round 14%. A £10k funding might develop to £11,400 in a 12 months. Hardly stellar, however given the current sturdy run actually not disappointing.

In fact, no forecast is gospel. That mentioned, I’m already sitting on a 75% acquire after holding for simply a few years and plan to stay with Lloyds for 20 years or extra.

Over that form of timeframe, I count on the rewards to construct up properly, even when the short-term path is bumpy. There are not any ensures to any of this in fact, particularly if tariff wars tip the UK into recession. But regardless of their sturdy run, I nonetheless suppose Lloyds shares are effectively price contemplating at the moment.