Lloyds Banking Group Finals

[Arborbridge]

At least the 'Jam tomorrow' may be a bit nearer now with the August deadline for claims. Incredible that they've managed to pour nearly £20 billion down that black hole.

Actually, we are getting the jam now - it's just that tomorrow there may hopefully be more of it!

[Dod101]

What is the objection to increasing the dividend? We had a special dividend and they want to use our money to buy back shares. There seems to be a pathological objection to increasing dividends, which would have a far better effect on the share price. Are they trying to keep it down?

I think that we should know.

Well from the statement of the results this morning, we have the following explanation.

'The Board's current preference is to return surplus capital by way of a buyback programme given the amount of surplus capital, the normalisation of ordinary dividends, and the flexibility that a buyback programme offers.'

I suppose what they mean by the 'flexibility' that a buyback programme offers, they mean that the buyback cost is not a one hit but is being spread over 9 months to the year end and I daresay that if some real disaster were to hit the UK economy, they could turn the tap off. Obviously, a special dividend would be a one off hit which could not be modified. As I said on another thread, if I were a shareholder I would be reasonably happy with a share buyback because it reduces the number of mouths that the dividend is required to service and for continuing shareholders that is surely a good thing. To answer your question, I think like most Boards as far as I can see, they will take the view that they cannot influence the share price and will not even try. They are anyway increasing the dividend and if Lloyds was not so UK oriented, I might be seriously looking at it. But to have all their eggs in one basket is not attractive to me.

Dod

[monabri]

I had a small top up on 24th Dec 18 at 50.99p (reducing my average Lloyds purchase price to 64.5p).

It just shows how 'sentiment' on a share can change so quickly! (Wish I had added more.....nevermind!).

This took my holding in Lloyds to 2.3% (with HSBA at 4.0%).

[Arborbridge]

I had a small top up on 24th Dec 18 at 50.99p (reducing my average Lloyds purchase price to 64.5p).

It just shows how 'sentiment' on a share can change so quickly! (Wish I had added more.....nevermind!).

This took my holding in Lloyds to 2.3% (with HSBA at 4.0%).

My average price is 85.6p! still a long way to go for me because Lloyds was one of my first HYP shares when the price was high and the dividends flowing nicely.

[Gengulphus]

3.21p 2018 compares with 3.05p 2017 and 3.05p 2016, so very slow dividend growth over the last 2 years. ...

Or with ordinary dividends of 3.05p 2017 and 2.55p 2016, plus a 0.50p special in 2016 only, which for the ordinary dividends was 19.6% growth for 2017 over 2016 and 5.2% for 2018 over 2017 - slowing growth, certainly, but that's always to be expected from a company that resumes paying dividends. And yes, the special has vanished, but the whole point of calling a dividend special is to say "don't expect this to be repeated"! (A few companies muddy the waters about that message by having 'special dividends' that they have a policy of paying and do pay every year, so that what they actually do sends a conflicting message. I wish they would find some other term for those dividends - obfuscating the meaning of standard terminology like that just does everyone a disservice by making shareholders of all companies have to ask themselves the question "Just what does this company mean by calling their dividend 'special'?"...)

... Also if 40%ish of the shareholder returns are in the form of buybacks what does that say about management's view of the sustainability of current profits?

It says that they think there's a significant risk that the proportion of them spent on buybacks isn't sustainable. But so does putting a significant part of current profits into paying a special dividend, so giving them shareholder-returns credit for special dividends but not for buybacks isn't exactly consistent!

Gengulphus

[ADrunkenMarcus]

The caveat is that we shouldn't trust forecasts - especially forecasts about the future. (In 2007, Barclays' dividend per share was expected to rise to 36p in 2008 and 39p in 2009!)

FWIW, Lloyds' topline is expected to be quite stagnant out to 2021:



Best wishes

Mark.

[brightncheerful]

As a punt on Brexit, I bought a few LLOY just before Christmas last on divi yield 6.08%. My capital gain to date (15 minutes lag) is just under 14.5%.

I keep thinking LLOY could prove to be a Benjamin Graham classic. sp at or around NAV, rising profits, progressive divi. What do you think?

[brightncheerful]

they mean that the buyback cost is not a one hit but is being spread over 9 months to the year end and I daresay that if some real disaster were to hit the UK economy, they could turn the tap off.

Or turn it on.

Unlike Hammerson (HMSO) whose buyback was until the recent results period revery day at sps way over the top as the sp continued to fall, LLOY could pick its timing carefully. a disaster for the UK economy could send the sp spiralling down and create a fabulous buying opportunity. Of course, the disaster would have to be resolved otherwise the sp might not climb back up again!

[scrumpyjack]

I'm not sure how much leeway companies have in the detailed timing of their share buybacks. I think what normally happens is that the necessary decision and approvals are made then it is handed over to the company's investment bankers or brokers to carry out. The company does not itself make day to day decisions on how many to buy at what price - that might distort the market. There may be limits so that own share purchases do not exceed a certain percentage of the shares traded that day.