Lloyds dividend: history, safety and yield
Lloyds pays a 1.58p interim dividend; its base-case annual dividends rise from 3.85p to 4.10p and 4.35p. Lloyds' dividend is supported when retained earnings exceed dividends and buybacks, but redress and credit costs can constrain distributions.
How much does Lloyds pay in dividends?
Dividends rise in the base case from 3.85p to 4.10p and 4.35p. That follows five years of increases and management’s progressive, sustainable policy, while remaining conditional on capital needs. The bear case gives 3.00p, 2.70p and 2.80p as redress and credit costs constrain distributions. The bull case gives 4.20p, 4.60p and 5.00p because stronger earnings and capital generation fund faster increases. The latest 1.58p interim dividend supports the base run rate, but the £322m latest-quarter impairment charge shows why the bear remains credible.
| 2025 | 2024 | 2023 | 2022 | 2021 | |
|---|---|---|---|---|---|
| EPS, diluted | 6.90 | 6.20 | 7.50 | 4.90 | 7.50 |
| − Dividends, per share | 3.55 | 3.06 | 2.68 | 2.30 | 1.95 |
| − Share buybacks, per share | 2.83 | 3.19 | 3.03 | 2.89 | 0.00 |
| = Kept, per share | 0.56 | 1.79 | 5.51 | ||
| = Paid out more, per share | 0.03 | 0.33 |
Is Lloyds' dividend covered by its cash?
From 2021 to 2025, Lloyds returned more earnings to shareholders while still investing in its operations and reducing selected risks.
A deposit brings cash in but also creates an obligation; a loan uses cash but creates an earning asset. That is why bank cash flow cannot be read like a manufacturer’s. A future Basel change could reduce risk-weighted assets without creating operating profit.
| 2025 | 2024 | 2023 | 2022 | 2021 | |
|---|---|---|---|---|---|
| = Earnings for common shareholders | 4,196 | 3,923 | 4,933 | 3,389 | 5,355 |
| − Dividends declared on common shares | 2,149 | 1,930 | 1,761 | 1,604 | 1,403 |
| − Share buybacks | 1,710 | 2,011 | 1,993 | 2,013 | 0 |
| = Kept to grow and build capital | 337 | 1,179 | 3,952 | ||
| = Paid out more than it earned | 18 | 228 |
What could change Lloyds' dividend?
The forecast moves toward the bear case if redress exceeds £1.95bn during October 2027–October 2028, because charges reduce profit, capital generation and buybacks. Deposit repricing and mortgage competition would weaken net interest income through 2027–2029, while a UK downturn from 2028 would raise impairments and compress the multiple.
| October 2027 | October 2028 | October 2029 | |
|---|---|---|---|
| Book value | 44,661 (40,121 / 45,561) | 47,761 (40,221 / 48,861) | 51,161 (40,521 / 52,461) |
| Shares (millions) | 55.86 (57.12 / 55.49) | 55.13 (57.59 / 54.48) | 54.49 (58.06 / 53.62) |
| Dividends per share | 0.04 (0.03 / 0.04) | 0.04 (0.03 / 0.05) | 0.04 (0.03 / 0.05) |
| Price to book value | 1.25 (0.85 / 1.50) | 1.30 (0.75 / 1.65) | 1.35 (0.70 / 1.80) |
What is Lloyds' dividend yield today?
The 3.6% dividend yield is backward-looking. Lloyds announced a 1.58p interim dividend, a further £1 billion buyback and continued commitment to a progressive dividend policy. The question is whether future earnings and capital can support those distributions while motor-finance risk remains unresolved.