If I’d invested £1,000 in Lloyds shares at the start of 2024, here’s what I’d have now

Lloyds shares are on the rise despite the risk of an interest rate cut emerging later in the year. So, how much money have shareholders made?

| 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.

Smart young brown businesswoman working from home on a laptop

Image source: Getty Images

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.

2024 has been a good year to own Lloyds (LSE:LLOY) shares. The bank hasn’t exactly been a stellar performer over the last decade, as near-zero-percent interest rates have made profitability a challenge. But today, the economic landscape is very different. And while higher rates have resulted in some loan losses for the company, overall, this has proven to be a net positive sending profits through the roof.

The effects of this are clearly reflected in the stock price. Since the start of 2024, the shares are up 17%. And zooming out to a full 12 months reveals an even better return of almost 26%. Pairing these capital gains with a chunky 5% dividend yield has turned the enterprise into a market-beating investment.

Created with Highcharts 11.4.3Lloyds Banking Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

Calculating profit

At the start of the year, Lloyds shares stood at 48p. Therefore, a £1,000 investment would have bought 2,083 shares, ignoring transaction fees. Today, the stock trades at roughly 56.1p, giving us a 16.9% capital return, or £169. But the bank also paid a 1.84p dividend per share in April this year. And when multiplied by the 2,083 shares owned, this translates into an extra dividend return of £38.30.

Should you invest £1,000 in Scottish Mortgage right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Scottish Mortgage made the list?

See the 6 stocks

Therefore, in total, for every £1,000 invested since the start of 2024, investors are now sitting on £1,207.30 – a 20.7% gain. By comparison, the FTSE 100, while also ahead of its average performance, has only achieved a 10.45% total return this year. In other words, Lloyds shares have outperformed the market by almost double.

Will Lloyds shares rise further?

Wider margins and improved profitability are just two of several important factors driving the stock’s impressive performance year to date. However, whether this upward trajectory will continue moving forward is a bit of a question mark.

Higher interest rates have been enormously beneficial. But with inflation almost below the Bank of England’s 2% target, it may not be long before cuts start to emerge. When that happens, the bank’s net interest margin is likely to come under pressure.

Meanwhile, the Financial Conduct Authority’s (FCA) regulatory probe into the bank’s historical car financing commission arrangements looks like it’s going to do some damage. Management has put aside £450m to settle claims made against the firm. And while this is going on, the bank’s deposits have actually fallen by £4bn as customers seek better interest rates from rival banks and financial platforms.

By themselves, not one of these problems appears to be a ticking time bomb. Lloyds has approximately £450bn worth of issued loans, only £15bn of which is related to car finance. At the same time, total deposits, while down, still stand at £471bn. But when combined, the challenges and threats this business now faces, create uncertainty.

Needless to say, uncertainty doesn’t exactly brew excitement. And should investor sentiment fall off, the momentum behind Lloyds’ shares will likely follow. And at a price-to-earnings (P/E) ratio of 7.4 versus analyst consensus of 6.6, the stock might already be fully valued.

Should you invest £1,000 in Scottish Mortgage right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Scottish Mortgage made the list?

See the 6 stocks

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.

Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group Plc. 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

artificial intelligence investing algorithms
Investing Articles

Up 272% in just a year, is Palantir stock just getting started?

This writer recognises that Palantir has grown its business very well -- but does the stock price offer him an…

Read more »

Runner standing at the starting point with 2025 year for starting in new year 2025 to achieve business planing and success concept.
Investing Articles

Up 50%? The Aston Martin share price forecast is mind-blowing! 

If analysts are right, the Aston Aston Martin share price could absolutely rocket in the year ahead. Harvey Jones says…

Read more »

Investing Articles

As the S&P 500 drops, here are 2 Stocks and Shares ISA holdings I’m watching

Our writer has different views on how President Trump's tariffs might affect these two US holdings in his Stocks and…

Read more »

Surprised Black girl holding teddy bear toy on Christmas
Investing Articles

£10,000 invested in Tesla stock at Christmas is now worth…

Tesla stock has been one of best-performing investments of the past decade. But things haven't gone to plan for investors…

Read more »

Investing Articles

Up 279% in 5 years, could Meta stock keep soaring?

Meta stock has more than tripled in five years. This writer sees lots to like about the business but also…

Read more »

Pink 3D image of the numbers '2025' growing in size
Investing Articles

25% total return in a year? Is now the perfect time to buy BP shares?

BP shares are on the front line of today's global economic and political uncertainty but analysts think they can still…

Read more »

Affectionate Asian senior mother and daughter using smartphone together at home, smiling joyfully
Investing Articles

With Cash ISA changes coming, could now be the time to consider buying shares?

Changes to the Cash ISA could lead to greater investment in the stock market. This could be a good thing…

Read more »

Investing Articles

These FTSE 100 dividend shares just got cheaper, thanks to President Trump!

Investors buying dividend shares can lock in bigger long-term yields when share prices take a tumble. These two just did…

Read more »