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The recent increases to dividend payments combined with billions of pounds in share buybacks has made Lloyds (LSE: LLOY) shares very popular with investors. The stock is regularly one of the most traded on the entire London Stock Exchange.
But has such popularity been rewarding for those who owned the shares? How much would a £10,000 stake have earned?
To start with, the dividend yield for someone who bought in January would have been around 6% over the year. This is above the FTSE 100 average and a figure that is rising.
More impressively, the shares have been surging upwards throughout 2025. Since the beginning of January, the share price has risen 72.18%. This makes it one of the FTSE 100’s best performers for the year.
Taken together, a stake of £10,000 at the start of 2025 would now be worth £17,825 by my calculation.
The good times could just be starting here too.
Get greedy
Before getting into why Lloyds could continue its ascent, we can’t ignore its recent struggles. Since the 2008 crisis, the banking sector has been in something of a fallow period. Investor confidence in the sector was shattered. The shadow of the ‘Great Recession’ loomed large and for many years after.
The period coincided with a long stretch of near 0% interest rates. Banks like Lloyds that do a lot of lending and borrowing can’t make much money on their loans when rates are so low. What kind of margin can you take from 0%? Not much. And that’s one reason why earnings have been subdued.
The net result is that the Lloyds share price fell below the £1 mark in 2008, and the stock has traded for pennies every single day since. This has led a lot of investors to think there’s no growth here anymore. But as Warren Buffett is fond of saying: “Get greedy when others are fearful.”
Consider?
For those investors aware of the risks, there could be a chance to get in while the shares are still cheap. Lloyds trades at a forward price-to-earnings ratio of just 11. That’s well below the FTSE 100 average, suggesting there could be plenty of value on offer too.
A possible turnaround can be paired with some chunky-looking dividend payments. The Lloyds dividend is set to rise in the years ahead too.
And tighter regulations mean the chances of a repeat crisis like the 2000s is minimised. Lloyds passed its recent ‘stress test’ with the Bank of England with flying colours. It also has a healthy Tier 2 Capital Ratio at the moment too.
All in all, this could be one of those rare stocks to offer strong dividends and share price returns. I’d call it one to consider.
