The Lloyds share price is still rising: here’s why I’d buy now

first_img Roland Head | Sunday, 30th May, 2021 | More on: LLOY Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays and Lloyds Banking Group. 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. Image: Lloyds Banking Group 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. Click here to get access to our presentation, and learn how to get the name of this ‘double agent’! Enter Your Email Address Simply click below to discover how you can take advantage of this. The Lloyds share price is still rising: here’s why I’d buy nowcenter_img See all posts by Roland Head 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. When I last looked at Lloyds Banking Group (LSE: LLOY) in April, the Lloyds share price was about 44p. As I write today, it’s 11% higher, at 49p. Despite this continued growth, my view remains the same — I reckon this FTSE 100 stock could return to the 60p level seen at the start of last year.I like Lloyds’ traditional banking model and its big market share. Although banks have had a difficult time over the last decade, I think most of these problems are now in the past. In my view, Lloyds’ shares could be a decent investment today.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…Why Lloyds?When it comes to investing, I’m a big believer in keeping it simple. If I can’t understand how a business makes money and what might go wrong, then I don’t want to invest. This is one reason why I like Lloyds. Despite its giant size, I think it’s quite a simple business.There’s no investment banking or speculative trading at this bank. All Lloyds really does is lend money to real people (and businesses) and provide everyday banking services.This traditional approach to banking seems to work quite well. Although loan losses rose last year due to the impact of the pandemic, the bank still accumulated surplus capital on its balance sheet. This is the cash the bank is allowed to use to fund dividend payments.Lloyds’ costs are lower than most rivals, too. Wages and other operating costs accounted for 52% of Lloyds’ income during the first quarter. At Barclays, that figure was 61%, at NatWest it was 68%. All else being equal, that means less money is left over for shareholders.Not a sure thingOf course, banking is a cyclical industry. Although the Lloyds share price has risen pretty steadily since the start of this year, there’s no guarantee the bank’s progress will continue.Although the outlook for the UK economy appears to be fairly good at the moment, I think it’s still much too soon to be sure how things will turn out as the pandemic recedes.After an initial surge of pent-up activity, I wonder if we’ll see business activity slow down later this year. Unemployment might rise.One particular risk, in my view, is that interest rates might start to rise. If that happened, I expect house prices to fall sharply, after so many years of ultra low mortgage rates. As the UK’s largest mortgage lender, that would affect Lloyds.Lloyds share price: what I’d doThere are no risk-free investments. But I think Lloyds is a fairly safe way to get exposure to the UK economy with an attractive dividend income.Broker forecasts suggest the bank will report an after-tax profit of £4.1bn this year and resume normal dividend payouts. These forecasts price the stock on 8.5 times forecast earnings, with a dividend yield of 3.8%.I think this valuation looks attractive and don’t see any red flags that might put me off. I’d be happy to buy Lloyds shares at current levels. Don’t miss our special stock presentation.It contains details of a UK-listed company our Motley Fool UK analysts are extremely enthusiastic about.They think it’s offering an incredible opportunity to grow your wealth over the long term – at its current price – regardless of what happens in the wider market.That’s why they’re referring to it as the FTSE’s ‘double agent’.Because they believe it’s working both with the market… And against it.To find out why we think you should add it to your portfolio today… There’s a ‘double agent’ hiding in the FTSE… we recommend you buy it! Our 6 ‘Best Buys Now’ Shareslast_img read more