As Lloyds (LON:LLOY) prepares to report its financial results on 24 February 2021, there is continued speculation on what the outlook is for the bank over the coming year. Investors will be playing close attention to announcements around dividend payouts and the effects of the coronavirus pandemic on the bank.
Lloyds share price
Lloyds shares are sitting at 34p, down from just under 60p per share a year ago. The Lloyds share price is also down from a more recent high of 39.5p in November 2020. While Lloyds shares have not performed well since the turn of the year, there are causes for optimism due to renewed hope for shareholder payouts, in addition to the rollout of vaccines across the UK.
In April 2020, as lockdowns came into effect across the UK, Lloyds did not make any quarterly or interim dividend payments to its shareholders. The company reasoned that this was to “serve the needs of the businesses and households through extraordinary challenges presented by Covid-19”.
The bank’s last dividend of 1.12p per share was paid out to shareholders on December 31 2019. Lloyds’ dividend yield, the ratio which shows how much a company pays out in dividends relative to its stock price, was at 1.8%. This was down from 6.2% at the end of 2018.
Nine months ago, Lloyds was required to halt dividends in order to maintain capital levels by the Bank of England. However, the regulator has now given Lloyds the go-ahead to make shareholder payouts as vaccines give hope to the UK economy.
It is not quite full-steam ahead for Lloyds and the other big banks, whose payouts will be scrutinised by the Prudential Regulation Authority (PRA). The regulator will be keeping a close eye on the Lloyds to ensure it has abided by its “rigorous remuneration regime in an appropriate fashion”.