With the Lloyds Banking Group PLC (LON:LLOY) (LLOY.L) share price having declined in recent months, it now has a forward dividend yield of 6.8% for 2019. That’s around 210 basis points ahead of the FTSE 100’s dividend yield, and suggests to me that the bank may offer long-term income investing potential.
Alongside a falling share price, the bank’s income return for the current year may also be boosted by a planned increase in dividends per share. They are due to rise by 0.55p versus the level from the previous year, with them expected to reach 3.6p in 2019.
Looking ahead to future years, it would not surprise me if Lloyds decides to further increase dividend payments. Its payout for the current year is expected to be less than 50%, which suggests to me that it may be able to afford higher payments in future without hurting its financial standing.
Of course, with the bank being UK-focused, Brexit may impact negatively on its financial prospects. In the current year, for instance, its EPS is expected to increase by just 2%, while there are fears that consumers and businesses will become increasingly cautious as the Brexit process heads towards its conclusion.
While this may be the case in the short run, I think the Lloyds share price could perform well in the long run. The bank is investing heavily in its digital opportunities. Not only could this help it to appeal to customers who are increasingly demanding improving mobile apps, it may also help to improve the bank’s efficiency yet further.
Therefore, while it is a relatively risky income share in my eyes, I’m optimistic about the long-term prospects for the company after what has been a challenging period. I believe that a 6.8% dividend yield for 2019 could mean that it offers good value for money.