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Lloyds Banking Group (LSE:LLOY) has impressed many over the past year as a stock offering both income and capital growth. The Lloyds share price is up 63% in the period, but also boasts a 3.55% dividend yield. For those focused more on the income potential for the coming year, it’s time to get the calendar organised.
Being on the books
I’m talking about the dividend declared back in January, which has an ex-dividend date of 9 April. This means that anyone who wants to get the payout must own the stock by this date, preferably a couple of days before. On 9 April, the share price could adjust down to reflect that anyone buying the stock from that point won’t benefit from the income payment. The dividend will then be paid on 19 May.
There are a couple of key points to note when looking at the April calendar. As someone who has been investing for many years, the share price fall as the stock goes ex-dividend is completely normal. It should fall by roughly the same amount as the dividend. There’s no likely advantage in buying just after the drop, and such an idea hasn’t been profitable over the long term.
Another key point is that this timeline is even more important for income investors who regularly put money to work on a monthly basis. For those with a portfolio in which more dividend shares are bought each month, careful planning is needed. It would make sense to include Lloyds shares in the February or March allocation, to ensure the stock is held in advance of early April.
Income potential going forward
Over the past year, the dividend per share has totalled 3.65p. For 2026, the forecast is for a total payment of 3.81p. As to next year, the expectation is for a further rise to 4.48p. If we assumed the share price stayed the same, the dividend yield could rise to 4.36% in 2027.
Of course, the share price could move higher or lower in this period. This would make the yield more or less than forecast. It’s also worth considering that dividend projections could be revised based on how well the company does in the coming years. But it serves to illustrate how the company could be a good source of income for the future.
This is backed up by the improving fundamentals for the UK economy. Inflation data out today (18 February) showed a continued easing of price pressures down to 3%. This could help lower interest rates later this year, boosting mortgage demand and leading to lower loan defaults and improved consumer spending. This would all be a positive for Lloyds.
There are risks. The ongoing unresolved motor finance litigation situation could cause both financial and reputational damages, depending on how things turn out. Yet even with this, I think it’s still a good stock for investors to consider.
