How to Buy Lloyds Stock in 2021
Lloyds Bank plc is a British retail and commercial bank. With numerous branches across England and Wales, Lloyds is the largest retail bank in Britain. The bank offers 24-hour telephone and online banking services. It also has an arrangement for its customers to be serviced by Bank of Scotland branches in Scotland and Halifax branches in Northern Ireland.
As with other bank stocks, Lloyds stock is benefiting from the reopening play currently dominating the market. By June 2021, the Lloyds share price had recovered more than half the losses it sustained in the February/March 2020 pandemic price crash.
This is our guide to buying Lloyds stock.
Learn How to Buy Lloyds Stocks in 3 Easy Steps
Find a Broker
The first thing is to open a share dealing account with an online stockbroker that can give you access to the London Stock Exchange (LSE) or New York Stock Exchange (NYSE) where Lloyds shares are traded. Look for a broker that charges low commission fees but has no minimum account deposit requirement.
Analyse the Lloyds Stock Price Chart
You already want to buy Barclays stock, so there is no need for further fundamental analysis. Study the Barclays share price chart to determine the best time to buy. Look at historical price action, support/resistance levels, and trading volumes.
When it’s time to buy, specify the number of shares or the monetary amount of your investment, then hit the “buy” button. Typically, you can buy at the current market price or place a limit order to buy at a specified maximum price. Ensure you have an exit plan before making a trade.
Lloyds Company Overview
Lloyds Banking Group plc is a British financial institution whose heritage extends over 320 years, with part of it dating back to the establishment of the Bank of Scotland by the Scottish Parliament in 1695. The bank is one of the UK's largest financial organizations, with 65,000 staff servicing over 30 million customers.
The Group is headquartered in London, but its operations span across the globe. The group operates under several distinct brands, including Lloyds Bank, Halifax, Bank of Scotland, and Scottish Widows. Lloyds Banking Group is listed on the London Stock Exchange (LSE) and is a constituent of the FTSE 100 Index. The banking group operates through three segments: Retail, Commercial Banking, and Insurance and Wealth.
Lloyds Business Model and Revenue Streams
Lloyds generates revenue through three segments: Retail, Commercial, and Insurance. The Retail segment offers a range of financial products to private individuals and small businesses. The Commercial Banking segment provides lending, transactional banking, working capital management, risk management, term lending, and debt capital markets services to corporate clients. The Insurance and Wealth segment offers life, home, and car insurance products, as well as pensions and investment products. The banking group generates revenue from insurance premiums, underwriting and consulting fees, interests charged on loans, as well as return on investments.
Retail is the face of Lloyds Banking Group, and it generates much of the bank’s revenue. The bank is the UK's largest retail bank and mortgage lender by market share. Most of its revenue is generated from interest from loans, especially mortgage loans. At the time of writing, the bank has lent £11bn to over 285,000 businesses under government-initiated COVID support schemes.
History of Lloyds
The origin of Lloyds Bank dates back to 1765 when button maker John Taylor and iron producer/dealer Sampson Lloyd set up a private banking business. Originally known as Taylor & Lloyd’s, Lloyds was the first private bank in Birmingham and operated from a single office for almost a century (99 years). Taylors & Lloyds played a prominent role in financing trade and industry in Birmingham which was an industrial hub during the industrial revolution that swept across Europe.
Following the demise of James Taylor in 1852, the “Taylor” was dropped from the firm's name because his sons were not interested in joining the business. The firm's name was subsequently changed to Lloyds & Company.
The need for additional capital led Lloyds to convert from a private bank to a joint-stock company in 1865 changing its name once again to Lloyds Banking Company Limited. In 1884, the bank absorbed the Lombard Street bank of Barnetts, Hoares, & Co. and adopted its famous black horse logo. In 1892, Lloyds acquired Twinings Bank, and in 1921, the bank secured its position as one of the ‘Big Five’ high street banks when it took over the Somerset bank of Fox, Fowler & Co. This was the bank’s largest deal until it acquired TSB eight decades later.
Lloyds has also been identified with innovative practices. The bank began employing women in droves during the First World War as a replacement for the men who had gone off to fight. The bank was also vocal against the slave trade. Mr. Lloyd, being a Quaker, was actively involved in the fight against the slave trade and sought its abolishment. The bank is also credited with introducing the first mechanized system of accounting procedures, which had begun in the late 1920s but wasn’t completed until 1962.
In 1972, the bank issued their first credit card and installed the UK's first Cashpoint machine that accepted plastic cards in Brentwood, Essex. This was also the country’s first live ATM that issued variable amounts of cash and immediately debited the amount from the customer's account. In 1995, Lloyds merged with the Trustee Savings Bank in what is regarded as the bank’s largest deal. The bank operated as Lloyds TSB Bank plc between 1999 and 2013, before reverting to its original name.
Brokers that Offer Lloyds Shares
Lloyds shares can be bought from any broker with access to the London Stock Exchange (LSE) or the New York Stock Exchange (NYSE). Based on commissions, user features of their retailing platforms, and other services, we have compiled a list of the best stockbrokers offering Lloyds stock on both exchanges.
Should I Invest in Lloyds Stock?
Lloyds stock, just like most bank stocks, was trading below its fair value in February 2021 due to the economic impact of the coronavirus pandemic. The rotation into value stocks meant that Lloyds and other bank stocks were set to gain significantly in subsequent weeks and months. Indeed, Lloyds shares had recovered more than half of their February/March 2020 losses by the beginning of June 2021, and look like they could have a lot further to run.
Lloyds Stock Investment Potential
At the time of writing, the financial sector remains one of the most undervalued sectors in the market, with many bank stocks trading at less than 15 times forward earnings estimates despite improving earnings growth outlooks. One of these banks is Lloyds. As the recovery play continues, investors will be searching for undervalued stocks that have been overlooked by the market. Lloyds is primarily positioned to benefit from attention from bargain hunters.
Moreover, as the economy reopens, consumers will begin to spend and borrow more. So, the bank should see its revenues increase because the bulk of those revenues comes from accrued interest on retail and mortgage loans.
What Kinds of Investors Should Include Lloyds Stock in their Portfolios?
At the time of writing, Lloyds is still trading below its pre-covid levels, despite the exponential gains posted by other bank stocks such as JP Morgan and Morgan Stanley in the United States. This reflects the relative performance of the UK and US stock indices, so potential Lloyds investors might be those who expect UK markets to eventually catch up with their US counterparts.
How Much Should I Invest in Lloyds?
The golden rule of investment is to invest only what you can afford to lose. How much you invest should depend on your disposable income. Even when you build your investment portfolio over time, do not invest more than 2% of your portfolio size in a single stock in one trade.
How to Buy Shares in Lloyds Stock?
You can always buy shares of any publicly traded company via a stockbroker. For some companies, however, you may also be able to buy directly from the company through what is known as a direct stock purchase plan (DSPP). Unfortunately, Lloyds does not have a DSPP in place.
Buy Lloyds Shares via a Broker
The process of buying Lloyds shares through a broker is somewhat the same for all brokers. Simply log in to your trading account and search for Lloyds using the appropriate ticker (LSE: LLOY or NYSE: LYG). Then, click on the stock and place your buy order. Your order will be sent to the exchange floor where it is executed. Once your trade has been registered, you will see the appropriate amount of units you purchased displayed on your screen dashboard.
Frequently Asked Questions
In the first half of 2021, Lloyds and other financial stocks have been trading below their fair value due to the economic impact of the coronavirus pandemic. However, the reopening of the economy should see Lloyds and other financial stocks catching up.
Yes, Lloyds has reported profits almost every fiscal year. However, its pretax profit dropped for the 2020 FY to £1.2 bln from £4.4 bln in 2019 FY. Of course, that was due to the coronavirus pandemic.
Yes, Lloyds has been paying its stockholders big dividends in recent years. However, the bank was forced to suspend its dividends in 2020 by the Bank of England who wanted to make sure that UK banks had enough capital on hand to support the economy during the coronavirus pandemic. The bank declared a £0.57 dividend in February 2021.
Invest with only an amount you can afford to lose and do not commit more than 2% of your investment capital to any single trade. If you are trading with leverage, always place a protective stop-loss order so you don’t lose more than you intended to risk. However, be careful not to set the stop loss too close to your entry level nor too far from it.
Lloyds stock is listed on the LSE with the ticker symbol LLOY. On the NYSE, Lloyds stock is denoted with the symbol LYG.
Yes! While fundamental analysis helps to determine that the company is in good financial health, technical analysis tells you the right time to buy the stock. In your technical analysis, you may look for a pullback to a support level or the breakout of a resistance level.