The Motley Fool

Where will the Lloyds share price go in August?

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.

British bank notes and coins
Image source: Getty Images

As a Lloyds Banking Group (LSE: LLOY) shareholder, a bullish August has been my hope for some months. First-half results from the big banks were due in the last week of July, and they look good. But the immediate market reaction was unexciting, with the Lloyds share price dropping on results day.

At 46.1p as I write, the shares are still a fraction down. And that’s even though Lloyds showed a £2bn pre-tax profit in the half, and “reintroduced a progressive and sustainable ordinary dividend policy, with an interim ordinary dividend of 0.67p per share.” Oh, and it lifted its full-year guidance too.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Financial sector dividends were suspended at the behest of the PRA when Covid-19 hit. But Lloyds’ balance sheet and liquidity have come through strongly. And the bank has been clear all along that it has been accumulating cash with a view to making returns to shareholders as and when practical. That knowledge has been enough to keep me on board. But I’d assumed a lot of investors were waiting for it to actually happen.

So why the disappointing Lloyds share price response now? I must stress that I don’t really care too much about such a short-term horizon. It’s really not possible to predict with any kind of accuracy. But watching what happens in the next month or two might give us some idea where sentiment is going. And sentiment has surely got to turn positive at some point, hasn’t it?

Sector-wide malaise

The poor reaction is not restricted to Lloyds. Barclays and NatWest shares have also responded weakly to H1 results. And the same seems to be happening to HSBC now. H1 profit soaring, interim dividend reinstated, and the share price barely moving.

One thought is that investors are simply being cautious in the face of economic uncertainty, waiting to see how things pan out in the longer term. That would be a surprising move for some of the big institutional investors, who rarely seem to look beyond the next quarter. Then again, maybe after several years of disappointing quarters, they want to see share prices rising first.

Or then, I might have judged Lloyds badly as an investment. And with the uncertainties the UK faces in the coming years, I can’t rule out the possibility of a further prolonged poor stock performance.

Give up on the Lloyds share price?

As a perpetual Lloyds share price watcher, I’m always banging on about how the long term is all that counts. But I’ve been saying that for years. So is it time to give up on my hopes and sell? I don’t think so. It sometimes really can take a long time for an undervalued stock to recover. And a sector can face a series of unpredictable setbacks beyond its control.

My main reason for holding is that I bought for the dividends. And even with the relatively short pandemic exception, Lloyds has been delivering on those.

If Covid progress continues and economic news starts to look up, I think we might even see a delayed restart for the Lloyds share price to climb in August.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies still trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Alan Oscroft owns shares of Lloyds Banking Group. The Motley Fool UK has recommended Barclays, HSBC Holdings and Lloyds Banking Group. 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.