Lloyds Banking Group PLC (GB:LLOY) is among the leading financial institutions in the UK. After rewarding its investors with higher returns, the bank’s shares have been flat this year. YTD, the stock has been trading down by 1.83%.
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Looking ahead, analysts maintain a positive outlook on the stock and anticipate a potential upside of more than 45% from its current level.
The Bullish Side
Lloyds is highly dependent on the UK mortgage market, which makes it more sensitive to interest rate changes. As a result, the bank has taken more advantage of the rising interest rate trend and will continue to do so. This was quite visible in its first-quarter earnings for 2023, where it posted a 46% jump in its pre-tax profits of £2.26 billion.
Just like its counterparts, Lloyds Bank is also facing headwinds but standing tall with its strong balance sheet and liquidity position.
12 days ago, Goldman Sachs analyst Martin Leitgeb maintained his Buy rating on the stock with a forecast of a 78% upside in the share price.
Dividend Growth
Another appealing factor for Lloyds is its 5.3% dividend yield, which is higher than most of its competitors in the UK banking industry. The dividend in 2022 exhibited a coverage of 3.04 times earnings, indicating that the company had the ability to cover its declared dividends more than threefold with its income.
Analysts anticipate dividends increasing from 2.1p per share in 2022 to 2.7p and 3p in 2023 and 2024, respectively.
Lloyds Share Price Forecast
On TipRanks, LLOY stock has a Moderate Buy rating based on five Buy vs. three Hold recommendations.
The average price prediction for a 12-month period is 65.57p, which implies a 45% growth from the current price.
Conclusion
With the combination of robust coverage and sustained impressive performance, Lloyds is well-positioned to enhance its dividend in the future.
According to analysts, the stock has additional growth potential and could serve as a viable long-term option.
