There are a handful of shares in my portfolio I love and plan to hold onto for a very long time. One is Barclays (LSE: BARC).
The stock’s been one of the top performers on the FTSE 100 this year. It has climbed 30.4% year to date. Zooming out, it’s up 34.2% in the last 12 months and 40.8% across the last five years.
That’s a solid performance. And that’s why an 8.2% decline in the last month has piqued my interest.
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This has been fuelled by yesterday’s (5 August) sell-off. There are rumblings coming out of the US that a stock market crash could be on the horizon. That’s spilled over to the Footsie. The Barclays share price took a 3.4% hit as a result.
But as billionaire investor Warren Buffet once said: “Be greedy when others are fearful”. That’s why I think now could be a great time for me to consider buying the dip for long-term gains.
Future plans
The stock market has wobbled, but I see that as an opportunity to buy a high-quality business on the cheap. Despite its share price falling, I remain confident in the strength of Barclays’ underlying business.
In fact, as a shareholder, I’m excited to see how the bank could perform over the next couple of years. That’s especially after it announced a major overhaul of its operations in February. As part of that, it wants to cut £2bn in costs by 2026.
Since that announcement, we’ve started to see Barclays make moves to streamline ops. For example, in July it sold its German consumer finance branch. Francesco Ceccato, the CEO of Barclays Europe, said the sale “aligns with our ambition to simplify Barclays”.
Extra income
Its sliding share price has also slightly pushed up its dividend yield. Today, it sits at 4.1%, covered comfortably by earnings. That’s also above the FTSE 100 average, which comes in at 3.6%.
Alongside that, the business plans to return £10bn to shareholders over the next couple of years through dividends and share buybacks. In the first half of 2024, it announced it had returned £1.2bn.
Slowdown in growth?
I am wary of a few risks. Some of its growth over the past year can be attributed to high interest rates. The base rate has been reduced to 5%. Should we get more cuts in the months to come, this will impact its bottom line.
On top of that, its invested heavily into its strategic overhaul. Should it fail to reach the targets set out, that could see the stock suffer.
I’d buy
But I’m confident the business can perform. If I had the cash, I’d happily snap up some more Barclays shares today. I think this dip could be a good buying opportunity.
The stock’s suffered in the last month as investor confidence has wavered. But I still see Barclays as a strong business in a prime position to excel in the years ahead. The passive income on offer’s an added bonus.
