Lloyds Shares up 327% Since 2020, Analysts See 18% Return
Lloyds Banking Group shares have risen 327% from pandemic lows. Analysts forecast an 18.1% total return by September 2027.
Key points
- Lloyds shares have risen 327% from 26p to 111p since the 2020 pandemic lows.
- Analysts project an 18.1% total return by September 2027, including a 4.6% dividend yield.
- The bank has spent over £9bn on share buybacks since 2021, prioritizing capital returns.
Lloyds Banking Group (LSE:LLOY) shares are trading at 111p, a 327% increase from the 26p lows recorded during the pandemic. According to Yahoo Finance UK, market consensus suggests the stock is undervalued by 13.5%, with a forward dividend yield of 4.6%.
The bank has maintained a consistent shareholder return strategy, executing share buybacks of £2bn annually from 2021 to 2023. Recent buyback programs of £1.7bn in 2024 and £1.75bn in 2025 demonstrate a preference for capital return over dividend cuts.
Forward Return Forecasts
Investors holding £5,000 worth of shares today could see the value grow to £5,675 by September 2027. This projection includes £230 in dividend income, resulting in a total return of 18.1% over the period.
Macroeconomic Risks To Profit
High energy prices from the Gulf conflict are driving inflation, with economists predicting four quarter-point interest rate rises before mid-2027. While this may boost net interest margins, it could simultaneously increase loan defaults and pressure the broader economy.
Regulatory threats include potential windfall taxes and the Bank of England ceasing interest payments on commercial bank deposits. Although Lloyds may not face material direct impact, these measures could reduce sector-wide investor confidence.
Valuation Versus Peers
Lloyds currently holds the highest price-to-earnings ratio among the five FTSE 100 banks. Despite this, 18 of the 20 analysts covering the stock recommend a Buy or Hold, with only two issuing Sell recommendations.
