funduffer wrote:Thanks Ian,
The commentary on dividends is:
In respect of the first half of 2021 and following the PRA update of 13 July 2021, the Board has announced an interim ordinary dividend of 0.67 pence per share, reintroducing a progressive and sustainable ordinary dividend policy.
Going forward, the Group will revert to paying any ordinary dividends half yearly, rather than quarterly, with the quantum announced with the half year and full year results. The Board believes this approach is appropriate in the current environment given its simplicity, environmental benefits and the additional flexibility it provides to the business. The Board will continue to give due consideration at each year end to the return of any surplus capital through the use of special dividends or buybac ks.
Looks like a lower overall dividend than pre-pandemic, but with the possibility of specials.
In September 2019 the dividend was 1.12p, so this interim is 0.67/1.12 = 60% of the pre-pandemic norm.
If we apply this factor to the last full year dividend (2019) we get 0.6 x (2.14+1.12) = 1.956p, which gives a current yield of nearly 4.2%.
The reference to the "PRA update of 13 July 2021" made me wonder what it said and whether Lloyds and other banks are still under restrictions about the dividends they pay - if so, "60% of the pre-pandemic norm" might be less than what Lloyds would feel they could reasonably pay. So I've tracked that PRA update down - it's at
https://www.bankofengland.co.uk/prudent ... e-uk-banks.
At first sight, it removes all restrictions on what banks can pay:
The PRA has therefore concluded that the extraordinary guardrails within which it asked bank boards to determine the appropriate level of distributions in relation to full-year 2020 results are no longer necessary and have been removed with immediate effect.
But it then goes on to say:
In the meantime, it is essential that banks continue to support households and businesses through the economic recovery and as the Government’s support measures unwind over the coming months, including in the event that economic outcomes are more severe than currently expected. Bank boards should therefore continue to exercise an appropriate degree of caution around the level of any shareholder distributions.
Make of that what you will...
In the case of Lloyds, what I personally make of it is that the board has probably erred on the side of caution this time around and so there's a reasonable chance that early next year, they'll decide on a final that is a bit more than 60% of the pre-pandemic norm. But not a certainty - so I regard 60% of the pre-pandemic norm as a reasonable forecast, though if anything erring on the conservative side.
funduffer wrote:Not too bad, LLOY would still qualify as a HYP share - just!
On this board's yield test, 4.2% is about a percentage point higher than the current FTSE100 yield of 3.23% according to
dividenddata and noticeably more than a percentage point higher than the current FTSE100 yield of 3.05% according to
the FT. That's rather more than "just" qualifying on that test!
Of course, HYPers apply more criteria than just that one and the few others stated in
this board's guidance - but which criteria those are is a personal choice. Some of the criteria people use are ones Lloyds is nowhere near passing - for instance, it has no chance of passing the "5 years of increasing dividends" criterion that quite a few use until it announces its final results for 2024 in early 2025. But I do wonder what criterion you're using that Lloyds only just passes?
Gengulphus