2020 dividend forecasts: Lloyds Bank, Barclays and Tesco

Invested in Lloyds Bank, Barclays, or Tesco? You’ll probably want to see these 2020 dividend forecasts.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

With 2020 not far off now, today I’ll be looking at the 2020 dividend forecasts for three of the UK’s most popular dividend stocks – Lloyds Banking Group (LSE: LLOY), Barclays (LSE: BARC), and Tesco (LSE: TSCO).

Below, you’ll find the current consensus dividend forecast, the prospective yield, the forecast dividend coverage, and some thoughts on each dividend stock. But always remember that dividend forecasts may not be accurate and are subject to change.

Lloyds Bank

FY2020 dividend forecast: 3.55p
FY2020 prospective yield: 6%

Lloyds’ 2020 dividend forecast is currently 3.55p. This equates to a prospective yield of a healthy 6% at the current share price. Earnings for 2020 are expected to come in at 7.15p per share, which gives a dividend coverage ratio of approximately two.

My thoughts? Lloyds has put together a nice little dividend growth track record since reintroducing its dividend in 2014, and assuming the 2019 payout is higher than the 3.21p per share the bank declared for 2018 (we’ll find out in February), a 3.55p per share dividend for 2020 will represent the seventh consecutive increase. That’s a good achievement.

There are certainly risks that could impact Lloyds’ ability to continue increasing its dividend of course, but overall, the stock appears to be a cash cow, in my view. I like it as an income stock.

Barclays

FY2020 dividend forecast: 9.49p
FY2020 prospective yield: 5.6%

Barclays’ 2020 dividend forecast is currently 9.49p. This equates to a prospective yield of 5.6%. Earnings of 23.5p per share are expected for 2020, which gives a dividend coverage ratio of around 2.5.

My thoughts? Barclays slashed its dividend heavily a few years ago, however the payout now appears to be on the rise again. Just recently, the bank announced a half-year dividend of 3p for the first half of 2019 and said that this is expected to represent “under normal circumstances, around one-third of the total dividend for the year.”

Looking at the big yield on offer and the solid level of dividend coverage, Barclays certainly looks interesting right now. That said, I’m a little hesitant about buying the stock for its dividend when it was only a few years ago that the company reduced its payout. I like to see a dividend growth track record of at least three to four consecutive dividend hikes when investing in dividend stocks. 

Tesco

FY2021 dividend forecast: 9.29p
FY2021 prospective yield: 4%

Tesco is a little different because its financial year ends 23 February. So, I’m going to look ahead to FY2021 (which is mostly in 2020). Here, the dividend forecast is 9.29p which equates to a prospective yield of around 4%. Earnings of 18.4p per share are anticipated, which gives dividend coverage of around two times.

My thoughts? Tesco is a bit like Barclays in that it hasn’t yet put together a solid dividend growth track record. After cutting its payout in FY2015, it paid no dividend at all in FY2016 or FY2017! Right now, Tesco’s dividend certainly appears to be on the up, but it’s still early days as the dividend was only reintroduced last year.

Given this lack of track record, and the fact that the supermarket landscape is likely to remain extremely competitive in the years ahead, I think there are better dividend stocks than Tesco at the moment.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Edward Sheldon owns shares in Lloyds Banking Group. The Motley Fool UK has recommended Barclays, Lloyds Banking Group, and Tesco. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

2 industry-leading value stocks investors should consider buying

These value stocks are at the top of their respective industries, and look like current bargains with the potential to…

Read more »

Black father and two young daughters dancing at home
Investing Articles

Just released: our 3 top small-cap stocks to buy before August [PREMIUM PICKS]

Small-cap shares tend to be more volatile than larger companies, so we suggest investors should look to build up a…

Read more »

Investing Articles

If I’d put £5k in a FTSE 100 index fund 10 years ago, here’s what I’d have now!

Charlie Carman explores the performance of the FTSE 100 index over the past decade and the merits of passive versus…

Read more »

Investing Articles

£15K stashed away? I could turn that into a second income worth £49 a day!

This Fool explains how she would look to gain a second income through investing in UK stocks, and the steps…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

With the Apple share price near an all-time high, would I be crazy to buy more?

After touching all-time highs yesterday, the Apple share price is on a roll. But is there still enough growth ahead…

Read more »

Investing Articles

Nvidia stock has fallen 13% from its 52-week high! What next?

Our writer explains why Nvidia stock has dipped recently and highlights some risks associated with investing in the AI leader…

Read more »

Investor looking at stock graph on a tablet with their finger hovering over the Buy button
Investing Articles

The AstraZeneca share price is up 88% in 5 years, but is it just getting started?

The AstraZeneca share price has had a great few years, as acquisitions and clinical trials delighted shareholders. So is there…

Read more »

Investing Articles

Here’s why I’m watching the Anglo American share price

The mining sector has always interested investors. But after a flat few years, I'm wondering what's next for the Anglo…

Read more »