Outlook for Lloyds Banking Group shares in 2020

Our head of markets identifies several reasons why Lloyds may do well in the months ahead.

16th January 2020 12:42

Richard Hunter from interactive investor

Richard Hunter, interactive investor’s head of markets, identifies several reasons why Lloyds may do well in the months ahead.

[Filmed 19th December 2019]

A stock that may be worth watching in 2020 is Lloyds Banking (LSE:LLOY). It's had a pretty good year, over the last 12 months its shares rising just over 20%. But a lot of that, of course, is down to the “Boris bounce”. If you look back a bit further, over the last five years, the shares are actually down 16%.

So maybe it's time that the UK banking sector in general, or Lloyds in particular, get some revaluation. Obviously, Lloyds has had its problems in terms of both PPI and the difficulty of being able to make money in this historically low interest rate environment.

Nonetheless, this is a lender with a sector-beating cost income ratio of around 47%, a punchy dividend yield of somewhere around 5.2%, and what is increasingly becoming a stronghold in the new digital environment.

If you add all that together, with the fact that it streamlined its business, it could be interesting. There is, of course, still some caution around the stock as the negotiations with Europe continue, which might explain the fact that the current market consensus of Lloyds is a buy, but a “cautious buy”.

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

Get more news and expert articles direct to your inbox