NatWest (LSE: NWG) shares have enjoyed another smashing year, rising 55% in the last 12 months. Over five years, they’re up an incredible 265%, with dividends on top. Can this fabulous run continue into 2026?
I could ask the same question about two other FTSE 100 banks: Barclays (LSE: BARC) and Lloyds Banking Group (LSE: LLOY), because they’ve been sizzling too.
Red-hot FTSE 100 sector
The Barclays share price is up 67% this year and 212% over five. Lloyds’ shares, which I own, have done even better, rising 72% over the last 12 months, although it’s playing catch-up after lagging in 2024. Over five years, Lloyds’ shares are up 161%. Again, all dividends come on top.
It’s taken a long time to get here. All three banks were hammered by the financial crisis and took more than a decade to piece themselves back together. Many Britons still haven’t forgiven or forgotten the bailouts, and there are regular calls for windfall taxes on profits. The sector already pays a 3% surcharge.
From an investment point of view though, they’re doing brilliantly. With dividends restored and profits booming, investors have piled back in.
NatWest posted an operating profit of £6.2bn in 2024 and rewarded shareholders with a 26% dividend hike. The remaining taxpayer stake has now been cleared, giving the shares another lift.
On 25 July, first-half results showed further progress. NatWest added 1.1m new customers, earnings per share jumped 28%, and the board felt confident enough to approve a £750m share buyback. The interim dividend was lifted 58% to 9.5p per share.
The board plans to return around half of attributable profit as ordinary dividends, with buybacks on top where appropriate. The forecast yield for full-year 2025 is 5.05%, rising to 5.48% in 2026. With a trailing price-to-earnings ratio just over 12, the shares still look reasonably priced.
Buybacks, income and growth
Barclays has a similar story to tell. In 2024, it made a pre-tax profit of £8.1bn, up 24% year on year, and returned £3bn to shareholders, alongside announcing a fresh £1bn buyback. The trailing dividend yield is lower at 1.86%, but the board plans to focus more on buybacks. The P/E is also around 12.
Profits at Lloyds dipped 19% in 2024 to £4.5bn, largely due to a £1.15bn provision for motor finance mis-selling. A proposed £1.7bn buyback soon cheered investors. Lloyds is the priciest of the three on a P/E of 15, while the trailing yield has slipped to 3.35% as the share price has surged. The latest interim dividend was hiked by 15%, and buybacks should keep the investor rewards flowing.
£10,000 in NatWest a year ago would have seen a total return of 59.37%, including dividends, turning it into £15,937. Barclays would have turned £10k into £16,851, while Lloyds would have delivered £17,492, helped by that catch-up rally.
These are stellar returns, but investors can’t expect to see that kind of performance every year. 2026 could be bumpier, especially if markets crash or a global recession hits. Falling interest rates are also likely to squeeze net interest margins and profits.
Even so, all three still look worth considering with a long-term view, as long as investors temper their expectations. If markets dip, they could look irresistible.
