3 Reasons Why I'm Excited About Lloyds Banking Group PLC
As a long-suffering shareholder in Lloyds (LSE: LLOY) (NYSE: LYG.US), I am delighted that the TSB has finally been spun off.
For me, this represents the final hurdle before full privatisation, with the government subsequently announcing that it plans to sell around 6% of its stake in Lloyds.
Indeed, the re-privatisation is great news for shareholders, as Lloyds can look forward to a bright and (hopefully) more prosperous future away from state hands.
This seems to be the view of the market, where forecasts are for earnings per share (EPS) to grow at an impressive rate of 30% in 2014.
Although various technology stocks, such as ARM Holdings, can match such growth rates, they remain among the highest rates in the UK market and growth investors should certainly be interested in Lloyds.
However, the great thing about Lloyds is that it offers income potential as well as the aforementioned growth prospects. The company recently stated that its aim is to pay out 70% of earnings as a dividend by 2016 and, with growth of 30% expected in 2014 alone, this means that a yield of 3.1% is expected in 2014.
Another couple of years of double-digit growth in 2015 and 2016 could see yields top 5% in 2016, dependent upon the share price movement, of course.
In addition, shares are not expensive at the moment. They trade on a price-to-earnings (P/E) ratio of 14, which compares favourably to the FTSE 100 on 15 and to the wider banking sector on 16.7.
So, with fantastic growth prospects, expectations of a very generous yield and shares offering good value at current levels, Lloyds shareholders look set for a bumper few years.
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