How to Buy Lloyds Shares

We cover the British bank, plus how to buy Lloyds Banking Group shares.

Updated: May 21, 2024
Matt Crabtree

Written By

Matt Crabtree

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The stock market is a device for transferring money from the impatient to the patient.

Warren Buffett (Source)

The Lloyds Banking Group operates many different brands of banking in the United Kingdom, and together they serve approximately 26 million clients. Some experts and investors are optimistic about its share price rising, while others are more pessimistic.

Lloyds' solid balance sheet, with a CET1 ratio of 15% and a liquidity coverage ratio of 146%, is regarded as a reason for the company's success.

This indicates that the bank is well-established and prepared to possibly withstand economic storms that may arise. The bank stands to gain from the Bank of England's Q3 2022 interest rate rises as well, as a result of the wider spread that has opened up between the rates it offers borrowers and savers.

In this guide, you’ll get a complete beginner tutorial on how to buy Lloyds shares.

Save Time? Just head to the Sum Up area.

Lloyds Shares Performance Update — Lloyds Stock News 

As the economies of the Eurozone and the UK slip into recession, the world economy plummets. Some signs of resilience have emerged in the United States, but growth is far below expectations, and China offers little hope for a rapid or lasting turnaround. 

Growing tensions between the West and the BRICS/emerging economies group have led to currency freezes at western banks and insufficient liquidity across distribution chains. Lloyds announced the closure of 44 more branches in Q2 2021 (bringing the total to 100+). 

Many investors are proceeding with caution in 2023-24, holding onto smaller shares of stock while expanding their exposure to bonds and other assets. 

Although this may be discouraging for investors, they must have a positive outlook and consider ways in which future productivity might be enhanced. How does one's perspective on the world influence one's financial decisions? This is, indeed, the most important issue.

Is it still worth it to invest in Lloyds, seeing as it had an ROI growth of 6% in 2023?

Source

Lloyds Shares News Update 2023/2024

The price of Lloyds shares (LON: LLOY) has shown indications of continuing its upward trajectory, with a slight increase in today's trading session. This follows January 2023’s over 6% increase, which has most investors feeling confident in the company's future.

Even though Lloyds Banking Group shares have had a rough few years, they have risen nicely from October's lows. They also increased by over 6% in the first week of the year 2023. Should you add to your current holdings or wait to see if this stock declines again?

  • Rising interest rates should be beneficial for Lloyds.
  • As of December 2022, the stock was trading at a cheap price, increasing in January 2023.
  • One of Lloyds' biggest concerns is the state of the British economy.

Over the last year, Lloyds stock has increased very modestly. While there has been a brief upswing, the stock has been trending lower for most of the year.

So, what might we expect in 2024? Well, I'm very certain the stock will keep climbing, and experts in the City say the dividend might be ready for an overdue increase. Here are the reasons why some may plan to increase their holdings in this stock.

Tailwind statistics

  • Lloyds is receiving a significant boost from the sensitivity of its customers to changes in interest rates.
  • NIMs (the spread between lending and savings rates) are increasing as a result. The bank predicted that the NIM would hit 2.9% by the end of the year, with additional growth possible in 2023/2024.
  • However, there's an additional benefit to this. In the same way that other banks do, Lloyds receives interest on its deposits at the central bank. Moreover, Lloyds' profits increase when interest rates rise.
  • According to estimates made by analysts, Lloyds will gain around £200 million in revenue from reserves maintained with the BoE for every 25-point basis rise.
  • With £145.9 billion in eligible assets and £78.3 billion in central bank reserves, Lloyds may earn an additional £2.5 billion in 2022 if the base rate increases by more than 300 basis points.

What does this mean for investors? You might decide to invest in this company rather than another bank because of its higher sensitivity to changes in interest rates. This is because of how it is funded and structured. Lloyds relies heavily on mortgage interest revenue since, unlike other banks, it does not have an investment department.

Debt statistics

  • There are a few possible outcomes for Lloyds in the next months. The third quarter impairment charge jumped to £668m from a write-off of £119m a year earlier as bad debt worries grew.
  • There are now encouraging indicators. One major factor contributing to this cost-of-living dilemma is the significant drop in wholesale gas prices. In early January 2023, delivery costs in Europe dropped 4.3%, to €73.7 (£64.7) per megawatt hour.

Dividends statistics

  • Investors are hoping for a dividend hike. Currently, the dividend yield on this company is 4.6%, which is above average. As far as investments go, I think Lloyds is relatively secure. So, for me, the fact that I am receiving a dividend yield of 4.6% each year is already a huge benefit.
  • And despite the gloomy economic forecast, City analysts are anticipating a full-year dividend of 2.4p in 2022, 2.7p in 2023, and 3p in 2024. When compared to the dividend paid out in 2019, the number for 2024 is a 25% rise.

Leading up to 2023 was a Protracted Decline

Let’s take a look at the stock's recent and past performance:

The value of Lloyds shares has dropped by about a tenth in 2022 and by nearly a third in the previous half a decade. Given that the FTSE 100 index is down by just 1 per cent during the same time period, your performance over the last five years seems quite dismal.

However, dividends in cash are not included in these calculations and would increase Lloyds' annual returns by a significant amount. That being said, this Footsie stock has been a letdown for far too long.

What do we think… are the stock prices still low?

While this isn’t financial advice, Lloyd's share price has fluctuated during the last year, from a high of 56p on January 17 to a low of 38.1p on March 7, 2022. (Two weeks after Russia invaded Ukraine). The price of the stock is now just over the median of its one-year range.

The whole Black Horse group is now worth £32.3bn at the share price. In some opinions, it's a reasonable price for a company that serves 26 million people and owns many recognisable financial brand names.

Furthermore, Lloyds' core competencies don't seem too taxing. The stock is priced at 7.9 times earnings, compared to roughly 14 times earnings for the FTSE 100. This equates to a 12.6% earnings return, which is almost twice the rate on the Footsie.

For those who bought Lloyds shares in the summer of 2022 because of the company's above-average dividend yield, as of Jan 2023, this was 4.4% per year, which is higher than the cash yield of the FTSE 100 index. The dividend is covered by the company's profits by a factor of 2.8, which leaves a lot of possibility for growth in the future.

2023 May Not Be Kind to Lloyds

Meanwhile, gloomy forecasts are accumulating about Lloyds and other large banks. Reduced consumer spending owing to falling disposable incomes is blamed by economists for a harsh recession in the UK this year.

Furthermore, loan losses and bad debts will undoubtedly increase as a result of the poisonous cocktail of growing inflation, skyrocketing energy costs, and rising interest rates. Lloyds, on the other hand, has a very robust balance sheet full of substantial liquid assets.

In addition, its Common Equity Tier 1 (CET1) ratio, an important indicator of financial health, is 15%, far above the intended range for the group.

The question is whether or not it's a good time to acquire Lloyds shares at their present price is open. For early adopters, they’ll have to say no, and the main reason for that is they already have shares acquired at cheaper prices.

And they have no intention of selling at anything even close to the current price. Indeed, they want to keep these value shares for the possible dividend income and capital gains they may provide in the future.

Predictions for Lloyds' Stock Price

As a UK banking giant, Lloyds Banking Group has over 26 million clients across its many brands. Analysts and investors have been debating its share price, with some expecting it to rise and others being more pessimistic. Lloyds' solid financial standing is praised due to its low CET1 ratio of 15% and high liquidity coverage ratio of 146%.

It's reassuring to know that the bank is well-established and prepared for any economic storms that may come its way. The bank stands to gain from the Bank of England's recent interest rate rises as well, given that a wider spread exists between the rates offered to borrowers and savers as a result of the higher base rate.

However, the future of the British economy and its potential effects on Lloyds are also sources of worry. KPMG forecasts GDP to increase by 0.2% in 2024 despite predictions from some experts that the recession would persist until the end of next year.

Lloyds may be especially vulnerable because of its concentration on the retail banking market in the United Kingdom. Competition also comes from digital banks, which are expected to enjoy large revenue growth.

After slumping in October, and closing 44 branches in June, the shares of Lloyds have made a dramatic comeback, rising over 6% in the first week of 2023. However, the success of the bank may be affected by the recession that analysts predict for the UK this year. Further, increasing interest rates, oil prices, and inflation might lead to a dramatic increase in loan defaults and other forms of bad debt. Overall… 

Lloyds Banking Group
  • Lloyds maintains an excellent financial position and a dividend yield of 4.4% notwithstanding these difficulties. Some experts are bullish on the stock because of the possibility of future dividends and price appreciation.
  • Given the foregoing fundamental research, one possible Lloyds share price prognosis is for the stock to continue trading in a strong positive trend, as it has since mid-October, contributing to a rise of more than 20% in its market value.
  • In the next trading sessions, its value may rise beyond 50p, and in the long run, it may rise above the 80 level. But it had a hard 2022 and has already announced over 100 closures

Forecasts may tell you a great deal about the forecaster; they tell you nothing about the future.

Warren Buffett (Source)

How to Buy Lloyds Shares — 1. Account Setup for Beginners

In order to purchase shares of stock in a company requires opening a broker account. There are tons of options available to us nowadays.

When opening an account with a broker, you'll be asked to fill out some standard paperwork and answer questions including about your trading experience and objectives.

Only deal with a broker who is duly licenced to do business in your state. One good area to start looking for a broker is for one to have a licence given by the FCA.

There is a wide variety of services and costs associated with broker accounts that may be provided by brokers. In light of this, the most cost-effective broker for one customer may not be the best choice for another. Factors like as portfolio size, investing preferences, trading volume, and service needs all play a role in determining the best option.

Buying shares in the United Kingdom typically costs about £8, and may go up to £12. In fact, several of them provide rebates for very large monthly trading amounts.

Foreign direct investment is often well received. Currency exchange rate fluctuations have both costs and hazards that must be acknowledged.

It is well known that traders with bigger holdings may benefit from a trading account with fixed fees, while traders with smaller holdings should investigate accounts that use percentage-based pricing.

Consider stamp duty as an extra expense. The acquisition of shares is subject to a 0.5% tax whereas the sale of shares is tax-free. Those trading AIM-listed shares have a remarkable advantage since no UK stamp duty is required.

You’ll find a variety of accounts, including the following:

  • Standard — All equities listed on exchanges that the broker participates in are available for trading with a normal trading account.
  • ISA — A stocks & shares ISA account, just as with the above account, provides tax benefits to the account holder. Earnings from investments like dividends, capital gains, and interest do not incur taxes. Depositing into a Stocks and Shares ISA gets capped annually at £20k.
  • SIPPS — All dividends and capital gains earned in a Self-Invested Contribution Pension Plan (SIPP) are yours to retain tax-free once you've reached retirement age, just as they are in a Stocks and Shares ISA. Furthermore, yearly payments may be withheld up to the sum of £40k. 55 is the cutoff age for withdrawals, sorry to tell you. Payments are taxed in the same manner as a traditional pension would be upon receipt.

The last action is to finish the web form. The account becomes active as soon as the broker receives a photocopy of your government-issued photo identity and your first deposit. A variety of methods exist for relocating monetary resources. Most people nowadays use their debit or credit card when making a purchase.

Try not to freak out if things seem risky at first. Using your portfolio's present and projected value together with your preferred share-buying frequency, you may quickly build a list of suitable investments. To help you get started, we have created a list of the best stock trading accounts we've tested.

How to Buy Lloyds Shares — 2. Planning for Beginners

You must gain control over your money or the lack of it will forever control you.

Dave Ramsey  (Source)

While this is not financial advice:

Since December 2021, the Bank of England (BoE) has increased interest rates by a total of eight times, and this trend is anticipated to continue. The market expected the Bank of England base rate to climb beyond 4% in early 2023 and above 5% by late 2023. 

This was great news for Lloyds, which saw a 15% increase in underlying net interest income last quarter.

The market anticipates dividend payments from Lloyds of 2.73p per share in 2023. These projected distributions provide yields of nearly 5% based on the current share price. Therefore, investors may still receive satisfactory returns through dividend payments even if the price of Lloyds' shares were to stay unchanged in 2023.

But there are questions to also ask yourself before investing your extra savings:

How much money can you afford to put in the market?

How much spare change do you have every month after paying all your bills? That's how much money you'll need to set aside. Investing in your future and establishing a rainy day fund, if you don't already have one, are both good uses of the money. However, the remaining funds are entirely at your disposal.

Are you familiar with Lloyd’s stock price as of right now?

We gave you a breakdown of the condition of Lloyds shares but this kind of data is always changing and there are multiple ways to analyse it. Having opened a brokerage account, you are now free to start your shopping. For inexperienced investors, picking the right stocks to purchase may be a daunting task. 

You’ll find brokers and other sources of market news often provide free research reports. Autochartist is a tool available to customers of IG and other stock brokers that uses historical price data to make predictions about future market changes.

By using the adage “retail is detail”, we may examine Lloyd’s business practises and see whether the firm is overvalued. The company's financial statements (Balance Sheet, Income Statement, and Cash Flow Statements) may provide you with an idea of its health.

When choosing a firm, your broker will provide you with 3 different pricing tiers to consider.

  • The gap between the best and worst offer prices for shares is known as the bid-ask spread.
  • The spread indicates the extra cost spent throughout the negotiation process.
  • A price taker pays the ask price, whereas a market maker pays the bid price… A share’s 1) bid shows buyer interest and its 2) ask suggests seller interest. 3) The bid-ask spread, i.e. gap between the bid and the ask price, results. It’s often accepted as an indicator of market depth.

Companies known as “market makers” (broker) facilitate financial transactions between buyers and sellers and earn money from the spread of these two prices. Anytime you're ready to make an investment, they'll give you shares. Moreover, should you ever choose to liquidate your shares, every deal must first go via your broker or trading platform.

Large corporations (those with a market cap of several billion pounds or more) often have narrow bid-offer spreads (anything from a 10th of a per cent to 1 per cent).

Companies with a valuation of £500m or more may have a spread of less than 1% between the best and worst offer, while firms with a valuation of under £100m may see a spread of 10% or more. For the share price to climb above the sum of the bid-offer spread plus trading costs, that is.

What method of exchange do you prefer?

An investment may be made in a variety of ways, such as all at once, in a lump amount, or in numerous smaller payments spread out over a greater window of time (known as “dollar-cost averaging”).

Consistently investing a predetermined amount of money into shares on a periodic basis (often once a month) notwithstanding fluctuations in the asset's value is what is meant by the phrase “regular investment.” This reduces the likelihood of short-term losses and may potentially lead to lower per-share expenses in the long run.

Which other shares or holdings do you have?

If you have others, the process of rebalancing may be needed.

How to Buy Lloyds Shares — 3. Volume for Beginners 

If you can’t successfully do something, don’t think you can tell others how it should be done.

Ray Dalio, Principles (Source)

Choose the number of shares you want to purchase now…

Using your broker's recommended price, you can easily calculate how many Lloyds shares you can afford to purchase by dividing your available cash by the current share price.

But how do you decide how much to put into each company if you're investing in more than simply Lloyd? Not even experts can agree on how to tackle this complex issue. Each person has their own risk tolerance and financial objectives, thus there is no universally correct response.

For maximum diversity, The Motley Fool suggests investing in between 15 and 25 separate businesses. Therefore, it's wise to put some money aside in case a good chance arises. Accordingly, we normally suggest allocating 2% to 4% of the total value of your shares to a new company.

Examine Lloyd’s stock health

Even while it's tempting to throw all your money into Lloyds because of the company's stellar reputation, you should do your homework first.

Lloyd’s annual and quarterly reports are a good starting point. These should be considered required reading for all publicly listed companies. Earnings reports and quarterly results are common names for these documents because of the information they include about a stock's financial performance and health.

The Lloyds and exchange websites are good places to look for these resources. From time to time, reputable experts weigh in with insights that might be useful on personal finance blogs and websites.

Never forget that you have the option of consulting an expert. Public analysts, such as the Motley Fool, give in-depth research on the markets and sectors that brokerage companies represent.

How much of your savings you should put into Lloyds is a question you could ask a financial advisor.

How to Buy Lloyds Shares — 4. Ordering for Beginners…  

The next step is to choose the purchase order type. Multiple types are available through the popular stock apps, allowing you to purchase Lloyds shares immediately or to hold them until the cost reaches a certain point.

The London Stock Exchange (LSE) is a subsidiary of the LSE Group and has its headquarters in London. Meanwhile, the London Metal Exchange, AIM Stock Exchange, and Aquis Stock Exchange are also exchanges located in the United Kingdom.

The NYSE is closed for lunch from 1:00 to 2:30 on weekends and holidays (GMT). The LSE welcomes traders for a total of 8.5hrs each day. The early/extended trading window is between 5:05 and 7:50 in the morning. The time after trading is 4:40 pm to 5:15 pm.

Buying shares uses the same order choices as selling shares. Choosing the best sort of stock to buy may significantly improve the returns on investment. When you're the one doing the selling, cutting expenses should be your first focus.

The primary options are as follows:

  • Best ordering — Your app will shut at the best possible price. Though these deals might be closed quickly, the whole price is not always made clear in advance.
  • The Buy-Limit order instructs the broker to begin buying shares of stock at a certain price if and only if the stock's price drops below that threshold. Here, the exchange will occur at the predetermined price. Unfortunately, there is sometimes a lengthier execution time and a higher trading charge associated with these transactions. If the stock price isn't high enough, the deal won't go through.
  • With a Sell-Limit order, the broker will only sell the stock if the price rises over a certain threshold. Similar benefits and drawbacks to a Buy-Limit order exist.
  • Stop-Loss orders are executed automatically by your broker if the price of your share falls below a certain threshold. This deal was reached to avoid more losses from becoming catastrophic. However, this might result in a number of lost opportunities. Let's pretend market volatility causes a stock's price to drop below an acceptable threshold. A post-order rise in the stock price won't prevent the sell order from being fulfilled.

How to Buy Lloyds Shares — 5. Finalising the Purchase of Lloyds Shares

When placing an order, your broker will display the specifics of your trade on the mobile app. Typically, you will find:

  • Make sure that LON:LLOY has been chosen (Lloyds shares) ✔️
  • Make sure you’re happy with the costs ✔️
  • Ensure you know any currency conversion fees (not applicable to Lloyd, as it’s located in London, if you’re paying in GBP) ✔️

Checking these details can help you prevent unwanted surprises and guarantee that you are investing in the correct firm with the correct amount of shares. If you enter erroneous information, it should be immediately apparent.

At that point, feel free to make a purchase…

Our crash course on the stock market has come to a close. After checking the information and making sure it's correct, you may submit your purchase.

Your broker will now provide you with a last, 15-second pricing quotation. An At Best transaction is estimated to be worth this much per share. The stock market's inherent volatility means the actual result might be vastly different from the projection.

A new investor may feel uneasy when confronted with the constant reminder of a ticking clock. However, you shouldn't worry. If the transaction timer runs out before it's completed, the transaction won't go through. First, check sure the pricing is to your satisfaction.

Select “Accept” if the results make sense to you.

The funds will be withdrawn straight away. But not always if trading foreign stock. It is possible to check the portion of your broker's website that records recent and forthcoming deals at any time to see whether a certain trade has been performed.

To start, congrats on making your first investment.

The last word is yours till we meet again. You are now equipped with the fundamental information to begin trading stocks. And you may begin building a robust portfolio that will, with any luck, provide returns in line with a method you find appealing.

Maintain complete and accurate records of all business transactions. This isn’t an issue if you’re using a tax-efficient account like a SIPP or an ISA, you will need them to complete your yearly tax return or self-assessment.

Remember that most people will pretend to operate in your interest while operating in their own.

Ray Dalio, Principles (Source)

Tracking and Rebalancing Your Lloyds Holdings 

If you want to get a sense of how your portfolio is doing, it's a good idea to look at it every so often.

The annualised percentage return is an excellent measure of the success of firms like Tesco and others. A concrete number may now be used as a benchmark against which to evaluate the success of your investment in comparison to others. Looking back at your initial data analysis over time periods might help you recognise how things have evolved.

The compound annual growth rate serves as a valuable metric too. If you look at Lloyd's performance over the last year in relation to that of similar firms and investments, you may get a sense of how it stacks up. You may look at Tesco's financial accounts to make sure the company is still doing well.

Compare Lloyds to other shares in the LSE to get a sense of its value as different from the overall health of London’s economy. You can use this data to figure out how Lloyds stacks up against its rivals.

When is Time to Rebalance?

Adding or removing assets and/or units as needed is what's known as “rebalancing”, and it's used to get a portfolio back to a stable state of investment. Portfolio rebalancing is the process by which an investor reallocates assets across securities and asset classes in response to a change in the investor's risk tolerance or investment objective.

The need to reevaluate one's investment strategy might arise for a variety of reasons, including a change in one's own personal circumstances. You may use these guidelines as a basic framework for making investment choices, even though your individual circumstances may need some deviation from the recommendations made here.

Should You Buy Lloyds Shares Using ETF/Index/Mutual Funds? 

The London Stock Exchange (LSE) is the world’s 9th biggest stock exchange based on market capitalization. All publicly listed stocks have a combined market capitalization of about £3T.

It has been suggested that a British individual who has never invested in stocks or ETFs should start their journey at the LSE.

The LSE is also a major international financial exchange for trading equities, commodities, and fixed-interest bonds.

Private investors cannot buy into the LSE directly since its stock is not publicly listed. Instead, you may put your money into exchange-traded funds (ETFs), shares in a specific company, or an index fund. These give you a broad range of stocks in different companies to diversify your portfolio. If you want to spread your risk, this is one way. 

Sum Up Area

How to Buy Lloyds Shares 

Buying Lloyds stocks in the United Kingdom:

  • 🌐 Head to eToro's homepage and choose the “Join” tab to create an account. Become a member by creating an account. Your capital is at risk.
  • 📰 Before you can buy stocks using your eToro account, you'll need to verify your identity and give a billing address.
  • 💳 Finally, put about $50 minimum into your trading account. At long last, it is time to buy… Lloyds is now available for purchase. Simply look for “LON:LLOY”, and click the “Trade” button. Done. 

Related Guides:

FAQs

Why was the price of Lloyds shares in 2022 so low?

Does Lloyds pay dividends?

Why are so many UK banks shutting down?

Does Lloyds repurchase stock?

What's driving the price of Lloyds Bank stock upward?

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