Should I double down on the Lloyds share price?

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first_img Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! For many years, Lloyds Banking Group (LSE: LLOY) had a reputation as an income stalwart. But I’m a bit worried that this may have distracted investors, including me, from the fact that the Lloyds share price is now 90% lower than it was 20 years ago.Today I want to explain why I think Lloyds does offer value, but I can’t bring myself to buy the shares.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…A crushing disappointmentIt takes a lot of dividend income to make up for such a dire share price performance. And to be honest, I don’t think Lloyds has delivered.Great dividend stocks will deliver reliable, rising payouts over many years. In turn, this regular income growth will support a gradually rising share price.One of the best examples in the FTSE 100 is consumer goods group Unilever, which hasn’t cut its dividend for more than 50 years. Over the last 20 years, Unilever’s share price has risen by about 390%. Despite this, the shares still offer a reasonable 3.1% dividend yield.My investing life might be simpler if I just stuffed my portfolio with Unilever stock. But investing all your cash in one company is rarely a good idea. Things can and do go wrong. And as an outside shareholder, you probably won’t know until it’s too late.I still want a bankAs the coronavirus pandemic gathered pace in April, the UK regulator forced all the big banks to suspend dividend payments. However, I think it’s fair to say that most of them could have afforded to pay dividends, while still handling the expected increase in bad debts.I certainly think that Lloyds could have afforded its dividend, which is one reason why I’m considering the shares again now. I’m quite happy to have one bank in my portfolio as these institutions can be a good way to gain exposure to the wider economy of a country — in this case the UK.Why Lloyds share price could be cheapAt 28p, Lloyds is currently valued at a 45% discount to its tangible net asset value of 51.6p per share. That’s pretty cheap, but of course there’s a reason for this. Well, two reasons.A decade of low interest rates has left banks struggling to make much money from mainstream lending. Even so, Lloyds’ scale as the UK’s largest mortgage lender and one of its biggest high street banks meant that the group was doing better than its main rivals.The pandemic changed all that. Lloyds might still be in a relatively strong position, but its profits are expected to head south this year. Unbelievably, interest rates have fallen even lower since March. And the likelihood of rising unemployment and a UK recession means that bad debts are expected to rise sharply.City brokers expect Lloyds’ earnings to fall by about 70% this year. Dividend payments are expected to return in 2021, but forecasts suggest a much reduced payout of 1.5p per share — half the 2018 payout.Even so, I think Lloyds shares do look cheap. The stock currently trades on just eight times 2021 forecast earnings, with a forecast yield of 5.4%.My concern is that the bank’s limited profitability means its shares will stay cheap for a long time. Right now, I’m not confident enough to rate Lloyds as more than a hold. Simply click below to discover how you can take advantage of this. Should I double down on the Lloyds share price? Our 6 ‘Best Buys Now’ Shares Enter Your Email Address Image source: Getty Images Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group and Unilever. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.center_img I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. See all posts by Roland Head I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Roland Head | Monday, 12th October, 2020 | More on: LLOY “This Stock Could Be Like Buying Amazon in 1997”last_img

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