Wow, what a good year to own shares of Lloyds Banking Group (LSE: LLOY). Indeed, the Lloyds share price has surged so strongly in 2025 that this stock is one of the FTSE 100 index’s best performers. The next (baby) step is for the shares to clear £1 — considered an important psychological milestone for investors. But what might it take for the price to leap beyond this marker?
Lloyds leaps
Even investors who bought Lloyds shares around mid-2025 are sitting on good gains. As I write, the stock trades at 97.22p, valuing the Black Horse bank at £57.2bn. That’s a price surge of 28.8% in half a year.
Also, the bank’s shares have shot up by 79% over the last 12 months — an almost unbelievable spurt for what I think of as a steady, boring business. What’s more, the share price has skyrocketed by 178.6% over the past five years. Even better is the icing on this cake: the generous cash dividends that this business pays to shareholders each year.
Of course, life wasn’t always this sweet for shareholders in British banks. During the global financial crisis of 2007/09, the Lloyds share price collapsed to a brutal low of 21.67p on 9 March 2009. If only I’d had the nerve to buy back then, when there was practically blood in the streets.
Delicious dividends
As it happens, my family portfolio bought Lloyds shares for 43.5p a share in mid-2022. Fast-forward roughly 3.5 years and I’m a very pleased stockholder sitting on a paper gain of 123.5%, excluding dividends. Happily, reinvesting this cash stream has turbo-charged our returns even higher.
Speaking of cash rewards, Lloyds’ total dividend per share has risen as follows: 2p in 2021, 2.4p in 2022, 2.76p in 2023, and 3.17p in 2024. This 58.5% boost over three years partly reflects the bank’s increased capital strength after surviving the 2020/21 Covid-19 collapse almost unscathed.
However, the soaring share price has dragged down the dividend yield to 3.4% a year, just ahead of the FTSE 100‘s yearly cash yield of 3.1%. Thus, Lloyds is no longer the dividend dynamo it once was for value/income/dividend investors (including me).
After £1, next stop £1.25?
With Lloyds shares just 2.8% short of 100p, I can see them breaching this mark in 2025 or early 2026. But for the stock to march on towards 125p might depend on good news right across the board.
Granted, a boom in the UK housing market in 2026 would be highly positive for Lloyds as Britain’s largest mortgage lender. Likewise, higher credit growth to businesses — combined with lower bad debts and loan losses — would also be a plus. However, falling interest rates would likely hit the bank’s lending margins — one key negative to consider.
Summing up, I think it’s possible — but not certain — that Lloyds shares will exceed £1.25 in 2026. Whatever happens, I expect more volatility from this stock next year, especially if the US stock market wobbles or tanks. After a fantastic five years, I fully expect a less rewarding 2026 as a Lloyds shareholder.
But what about the spicier shares out there right now?
