Here are the latest 2023/2024 dividend forecasts for Lloyds, Barclays, and HSBC

The most recent dividend forecasts for a trio of UK banks suggest there’s some substantial income on offer from them in the years ahead.

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UK bank stocks are offering some attractive dividend yields right now. This means they could be a great source of income. Here, I’m going to provide the latest dividend forecasts for Lloyds (LSE: LLOY), Barclays (LSE: BARC), and HSBC (LSE: HSBA). I’ll also give my take on the best bank stock to snap up right now.

Lloyds

Starting with Lloyds, it’s currently expected to pay out 2.78p per share in dividends for 2023, followed by 3.11p per share for 2024. At today’s share price of 45.3p, these projected payouts equate to yields of 6.1% and 6.9%.

Now, the good news here is that dividend coverage (a measure of dividend safety that’s calculated by dividing earnings per share by dividends per share) is quite high.

With analysts expecting Lloyds to generate earnings per share of 7.48p this year and 7.63p next, the dividend coverage ratios for 2023 and 2024 are 2.7 and 2.5 respectively. A ratio above two generally suggests a company’s payout is safe.

On the downside however, Lloyds is very exposed to the UK economy (and the housing market, in particular). This is a risk for income investors to consider.

Barclays

Turning to Barclays, analysts currently expect payouts of 8.91p per share and 10.1p per share for 2023 and 2024 respectively. These payouts translate to yields of 5.7% and 6.5% at today’s share price of 155.3p.

Now again, there’s a high level of coverage here. Currently, the dividend coverage ratios for 2023 and 2024 stand at 3.6 and 3.4.

Another plus is that the company’s valuation is very low. Currently, Barclays has a forward-looking price-to-earnings (P/E) ratio of just 4.8 versus 6.1 for both Lloyds and HSBC.

One risk here though is that Barclays has quite a lot of exposure to the US. And there’s still talk of a recession over on that side of the pond.

Another is that US regulators are introducing new liquidity rules for banks. This means Barclays may need to set aside billions more in capital to guard against risk.

HSBC

Finally, we have HSBC. It’s currently forecast to pay out 63.1 cents per share for 2023 and 79.8 cents per share 2024 (it reports in US dollars). So at today’s share price of 643.1p, we are talking about yields of 8% and 10.2%.

Dividend coverage stands at around 2.0 and 1.6, so it’s a bit lower than Lloyds and HSBC.

HSBC has quite a lot of focus on Asia these days. And this is a region with a lot of long-term growth potential. The stock is also the only one of the three that’s currently above its 200-day moving average (in a longer-term uptrend).

Of course, the big risk here is the bank’s exposure to China (and the Chinese property market). This adds some uncertainty in the near term.

The best bank stock?

As for the best bank stock of the three, my pick is HSBC. Not only does it have the highest yield (assuming the forecasts are accurate), but it also has the most growth potential in the long run, to my mind.

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.

Ed Sheldon has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays Plc, HSBC Holdings, and Lloyds Banking Group Plc. HSBC Holdings is an advertising partner of The Ascent, a Motley Fool company. 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.

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