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Lloyds share price: Implications of the upcoming ex-dividend date

We look at the bank’s recent share price performance, its recently declared final dividend and the implications of its fast approaching ex-dividend date.

Keep reading to discover:

Lloyds share price ↑

Investors have piled into Lloyds Banking Group PLC (ticker: LLOY) over the last six months, with the stock up approximately 65% in that period.

As the ex-dividend date looms, Lloyds finished out Monday’s session significantly higher, rising 2.62% to close at 44.39p per share.

Looking at the technicals, according to IG Chief Market Analyst Chris Beauchamp:

'Lloyds has continued its steady ascent, having broken above the 40.3p high that marked the peak at the end of 2020. A month-long drop in January saw the price bounce from 32p, mirroring the move up from mid-December and creating a durable double bottom.’

Mr Beauchamp added:

‘This bounce carried the price back to the December high and then led to a break higher. Following on from this the uptrend has been steady and relentless, with elevated stochastic readings pointing towards the strength of the trend.’

The dividend outlook

As part of the bank’s full-year results, Lloyds declared a final dividend of 0.57p per share, the maximum amount allowed under PRA guidelines. The ex-dividend date for the final dividend has been set as April 15, with the record date set one day after, as April 16.

Lloyds is set to pay that final dividend on May 25, 2021.

Here’s how that stacks up against Lloyds’ dividend payments from the last three years:

Ex-Dividend Date

Type

Amount (GBX)

10/08/2017

Interim

100

19/04/2018

Final

205

16/08/2018

Interim

107

4/04/2019

Final

214

8/08/2019

Interim

112

15/04/2021

Final

57

*Data from advfn.

For reference, in March 2020, the PRA told major UK banks to suspend the payment of dividends and buybacks until the close of 2020. This directive was made in response to the coronavirus pandemic, with the full breadth and depth of the economic impact at the time being hard to calculate.

With the economic outlook improving since then, the PRA lightened their stance in December 2020, saying that it would not extend the suspension of bank dividends and buybacks.

‘Is not necessary and that there is scope for banks to recommence some distributions should their boards choose to do so, within an appropriately prudent framework,’ said the PRA.

Looking forward, Lloyds management said the intention was 'to accrue dividend and resume progressive and sustainable ordinary dividend policy.'

Implications of the upcoming ex-dividend date?

For traders and investors, what are the consequences of Lloyds upcoming ex-dividend date?

In general terms, for investors who want to be entitled to a company’s upcoming dividend, they have to have owned the stock prior to its ex-dividend date.

Example: In the case of Lloyds, should an investor buy the stock before April 15 2021 (the ex-dividend date), they would be entitled to the bank’s final dividend of 0.57p per share.

However, if they were to buy the stock after April 15, they would not be entitled to the bank’s final dividend.

The other key term mentioned above is the record date. This is simply the cut-off day for the company paying the dividend to decide which shareholders qualify to receive it

Key Implication: A company's share price will often fall on its ex-dividend date – generally 'proportional' to the dividends being paid out to its shareholders.

This happens because dividends are typically paid in cash and in such a case, represent a distribution of retained earnings. Ultimately, dividends paid could make up a small or large percentage of a company’s overall market value and therefore trigger differing levels of volatility on the ex-dividend date.


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

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