By Malcolm Stacey | Wednesday 3 May 2017
Disclosure: I own shares in one or more of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Hello Share Planters. Here I am again, risking a commendation to look at the shares of one of the major British banks. This time Lloyds (LLOY) seems to me a worthwhile proposition. I am heavily over-exposed to this lot, so I personally hope so.
Last week, the company issued first quarter figures for 2017 which were rather good, showing improved profits of £2.1 billion. And that’s no mean feat when interest rates are still so low. Charging more for the money they loan is a big chunk of banking profits.
Most of Lloyds stock which has been owned by the government is no longer owned by the government. It’s less than 2% now. And Whitehall’s sale of shares to private owners loosens state fetters. And the big City always likes to see that.
Lloyds has been cutting costs like billy-oh. Also, I’ve been saying since the big bank crashes of 2008 that lessons must have been learned by now. While all those PPI claims must be drying up. Even so, Lloyds had put a lot of cash by to withstand further knocks in that direction and eventually much of that unused cash will probably be returned to shareholders.
It’s rather ironic that analysts at a rival British bank, Barclays (BARC) have increased their target price for LLoyds to 77p. Currently it’s tickling 70p.
The P/E ratio I have is 23.84 which is rather high, but there is a reasonable dividend at 3.4%. I think we can expect that to rise to 5% fairly soon.
The current big cheese at Lloyds, Antonio the mighty, seems a good chap to have at the helm. He is promising a simpler bank with less risk to shareholders. So if you can hold your nose when the word ‘ bank’ is mentioned, this seems like a reasonable buy to me, with a decent dividend return to suggest it as a longer term member of your portfolio.
And now the Punter’s Return is open again.
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