The Motley Fool

6.3% dividend yields! A UK stock I’d buy instead of Lloyds shares

A Lloyds tech engineer works on the bank's digital platform
Image: Lloyds

London’s listed banks like Lloyd Banking Group are some of the most popular shares among UK stock investors. I’ve resisted the urge to buy the FTSE 100 bank or any of its fellow UK-focussed rivals, given the prospect of sluggish economic growth over the medium-to-long term. I’d be much happier to invest in TBC Bank Group (LSE: TBCG) today.

This particular banking giant is the largest in Georgia, meaning it’s in great shape to exploit soaring economic growth there in the 2020s. The experts at Statista, for example, think the economy there will grow between 5.2% and 5.8% each year between 2022 and 2026. By comparison, the British economy is tipped to grow closer to 2% towards the middle of the decade.

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!

TBC Bank has been expanding into other emerging markets in recent years too, to boost profits growth. It operates Uzbekistan’s only digital bank.

Better value than the Lloyds share price

I’m also taken by the better value for money that TBC offers compared with Lloyds. The Georgian bank trades on a price-to-earnings (P/E) ratio of 4.9 times for 2022, far better than the 8 times the Lloyds share price currently commands.

Moreover, TBC Bank also offers superior value when it comes to dividends. The yield here sits at a mighty 6.3% for next year. This is much better than the 5.2% that Lloyds offers and smashes the broader 1.9% average for FTSE 250 shares.

Why I’d buy TBC Bank today

Clearly, Lloyds still offers terrific value for money. And I can understand why many UK share investors might prefer to invest in the FTSE 100 bank instead of TBC.

It’s a well-established name and a giant in the British banking industry, whereas its Georgian counterpart is less familiar to most. Furthermore, banking regulations are much more stringent in the UK than in Georgia. This perhaps provides better peace of mind over the robustness of its operations and the quality of its investments.

That said, the National Bank of Georgia has taken significant steps over the past few years to improve risk management processes and overall stability in the country’s banking system and the broader economy. More work is needed, but I’m encouraged by the central bank’s commitment to keep rapidly modernising its financial sector.

I also like the fact TBC is a leader in areas like digital banking. This compares with Lloyds which is fighting a rearguard action to see off the online-led challenger banks like Starling and Monzo. It faces high costs as a result and a steady loss of market share.

Of course, TBC isn’t totally immune to the threat of competition. Bank of Georgia, for example, is another major player in the country’s banking sector. But the competitive pressures are much less suffocating here than those faced by Lloyds. I think TBC Bank could help me make a lot of money and would much rather buy it over Lloyds shares.

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!

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended 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.