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What does the next year have in store for Lloyds (LSE: LLOY) shares? Where might the share price (currently 87p) be in a year’s time? What kind of dividend yield could we expect over the next 12 months? And where might the stock go to November 2026 and beyond?
I am yet to get my hands on one of those crystal balls, therefore precise answers to these questions elude me. But we can still do the next best thing and look at the latest forecasts for the FTSE 100 bank.
Dividends
Let’s start with the dividends. It’s good news for anyone wanting bigger payments from Lloyds shares. The forecasted rises are some of the biggest across the FTSE 100. The dividend payment is expected to rise by 14% and then 16% in the 2025 and 2026 financial years respectively.
In terms of share price, analysts are mostly bullish on the stock. The average price target in a year’s time is 99.5p with the highest price target being 110p. Either would represent a pretty good return from the current 87p share price.
Let’s combine the two by using an example stake. If the consensus forecast is accurate then, by November 2026, we might expect to see £1,000 invested into Lloyds shares turn into around £1,193 for nearly a 20% return.
If the highest price target is accurate, then we would expect a total of £1,319 instead. That’s over 30% on the original stake. Not bad going.
Keep an eye on
None of this is guaranteed, of course. As I write, we are a few days away from the Autumn Budget. While the latest rumours suggest Lloyds won’t be directly in the firing line, there is the chance of a windfall tax on banks that would put the brakes on share prices across the sector.
The UK economy is another thing to keep an eye on. Lloyds is more exposed to domestic goings on than the other Footsie banks, which means a stuttering economy could make a dent in that share price. I was struck by the quote from Ryanair chief Michael O’Leary that the economy is “doomed” under the current government. And there might be a nasty surprise or two in that aforementioned budget.
On the positive side, the recent increase in earnings has been driven by higher interest rates. If rates stay high, then this gives lenders better margins on the loans they offer. If interest rates continue at elevated levels, then we could be looking at a good decade for Lloyds shares rather than just a good year or two. Taking it all into consideration, I think it’s a stock worth considering for the next year and indeed for the long term.
This story originally appeared on Motley Fool
