How to Buy Lloyds Shares UK [2024]

Bank stocks are often seen as a reliable buffer for investors during periods of economic instability. As concerns over rising inflation and potential recession loom, there’s a growing trend among investors to gravitate towards investments in banking institutions.

In this guide, we analyse the most important facts about the banking giant Lloyds, explain how to buy Lloyds shares in the UK, and provide an overview of the most reliable brokers to use.

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About Lloyds

Lloyds Banking Group (LSE: LLOY) is a British financial institution established through the merger of Lloyds TSB and HBOS in 2009. While Lloyds Bank was founded in 1765, the broader group’s heritage extends over a remarkable 320-year span, tracing back to 1695 when the Parliament of Scotland founded the Bank of Scotland.

Lloyds Banking Group’s homepage. Source: lloydsbankinggroup.com

As one of the “Big Four” clearing banks in the UK, alongside HSBC, Barclays, and NatWest Group, Lloyds holds a prominent position in the nation’s financial landscape. Back in 2022, Lloyds secured its spot as the UK’s third-largest bank in terms of total assets as well as earned its place among the top 10 banks in Europe, measured by market capitalisation.

Lloyds Group operates under several distinct brands, including Lloyds Bank, Halifax, Bank of Scotland, and Scottish Widows, and is structured around three core divisions: retail banking; insurance, pensions and investments; and commercial banking.

Lloyds Banking Group is a publically traded company with a primary listing on the London Stock Exchange (LSE) under the ticker symbol LLOY, as well as a secondary listing on the New York Stock Exchange (NYSE). It is also a constituent of the FTSE 100.

Note

For the purpose of this guide, we will use ‘Lloyds’ as a shorthand reference to the Lloyds Banking Group.

Where to buy Lloyds shares?

Thanks to the abundance of online brokers, such as eToro, acquiring shares in your preferred companies is as straightforward as making a takeout order. In fact, buying Lloyds shares, and investing in stocks in the UK at large, only requires a few simple steps.

However, selecting a broker that fits your unique needs, including your investment objectives and trading approach, is vital for guaranteeing a smooth trading experience.

Keeping these considerations in mind, let’s dissect the process step-by-step.

How to buy Lloyds shares? Step-by-step process

As a publicly-traded company, investors can purchase shares of Lloyds through a regular retail broker. The following section will offer an in-depth overview of the step-by-step process as well as our recommendation for specific platforms to use.

Step 1: Choose a broker

As mentioned above, to buy Lloyds shares online, you’ll need a brokerage account. Your ideal platform should match your investment style (long-term buy-and-hold strategy or active day trading) and needs (e.g., whether you wish to trade more advanced financial vehicles like options). When assessing brokers, here are some crucial characteristics to consider:

Fees: Brokerage fees are a type of fee collected by brokers to execute your transactions or provide specialised services. Fortunately, today, the vast majority of online brokers offer commission-free stock and exchange-traded funds (ETF) trading;
Security: Choose a trustworthy broker by ensuring it is fully authorised and regulated by the Financial Conduct Authority (FCA);
Trading tools: Active traders may prefer brokerage accounts with all the bells and whistles. Some brokers offer fully customisable platforms with comprehensive analysis tools or access to additional data for an extra cost. If such additions are unnecessary for your purposes, avoid paying extra for them. It’s typically a good idea to look for a user-friendly platform with a competitive fee structure if you are new to stock trading. A dedicated section with investing tips and tricks is a bonus;
Access to market data: Look for a platform that offers solid market research and reporting tools to help you trade confidently with updated data;
Fractional stock trading: Fractional shares enable investors to buy stocks or ETFs by the sterling amount, which is particularly valuable for investors with limited capital and the desire to build a diversified portfolio or investors looking to set up a dollar-cost averaging (DCA) strategy.

Top picks

To securely invest in Lloyds and buy LLOY stock, consider these brokers:

1. eToro

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2. Interactive Brokers (IBKR)

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Step 2: Fund your account

Once you’ve decided on a broker and set up an account, you can fund your account. Various deposit methods will typically be available, including linking a bank account directly, using a debit, credit, or prepaid card, or opting for a third-party payment service such as PayPal (PYPL).

Remember, it can sometimes take up to three days for the money to reach your account.

Step 3: Research the company

As a publically traded company, Lloyds’ annual financial reports, shareholder presentations, dividend details, environmental, social, and governance (ESG) reports, along with the latest press releases and regulatory updates, can be accessed directly through its investor relations section.

These reports provide critical insights into Lloyds’ financial health, future plans, and potential challenges that both the company and the wider industry might encounter, including increased competition from the expanding digital banking sphere, escalating pressures from regulatory oversight, as well as potential headwinds presented by an unfavourable economic climate.

Step 4: Decide how much you want to invest

Next, you must determine how much to invest, and this depends on various factors, such as the current stock price and the number of shares you wish to acquire. If the stock’s price is financially out of reach, don’t panic – consider fractional shares. With fractional shares, you can purchase a portion of a share at the exact cost that matches your budget.

Remember, however, that given the inherent volatility of the stock market – results are never guaranteed. Therefore, only invest what you are willing to lose and carefully evaluate the level of risk you’re prepared to take on.

Step 5: Place your order and buy LLOY shares

Once you’ve decided on the number of shares or the monetary amount you wish to invest, you are set to place your order. This can be done by signing into your brokerage account and locating the ticker LLOY.

There are two order execution options available to you:

Market order: A command to buy shares at the current market price, carried out immediately (subject to availability);
Limit order: An order only triggered when the stock reaches your chosen price. For instance, if your desired purchase price for LLOY shares is £40 or lower, you’d establish a limit price of £40. The transaction will then only go through once the share price dips to £40 or lower.

Invest in LLOY with index funds

Investors should spread their investments across various asset categories, industries, and sectors to buffer against market volatility. One of the easiest ways to achieve diversification is to invest in ETFs.

Step 6: Monitor your investment

Monitoring your investment in Lloyds, like any other investment, involves regular checkups on key financial indicators, industry trends, and broader economic indicators. Here’s what to look out for:

Financial statements: Periodically review Lloyds’ financial statements, including balance sheets, income statements, and cash flow statements. Look for improvements or declines in profitability, increasing or decreasing debt levels, and positive or negative cash flow;
Ratio analysis: Use ratios to evaluate Lloyds’ financial health, including looking at the price-to-earnings (P/E) ratio, price-to-book (P/B) ratio, debt-to-equity ratio, and return on equity (ROE);
Company announcements: Keep an eye on any relevant updates from Lloyds, including changes in management, the launch of new products or services, earnings reports, and dividend information;
Industry trends: Understand the banking industry’s current trends and challenges;
Macroeconomic conditions: Monitor broader economic conditions and indicators to which the banking sector is susceptible, such as interest rates, inflation, GDP growth, and unemployment rates;
Stock price: Monitor the stock’s price and volume trends. Significant changes could indicate a change in market sentiment. Remember, however, daily fluctuations are normal and shouldn’t cause alarm. Try to focus on longer-term trends instead;
Analyst reports: Read analyst reports for insights into Lloyds’ performance and potential future. Be aware, though, that these reports are opinions and can be biased;
Dividend payouts: Monitor the regularity, increase, or decrease of dividends;
Regulatory environment: Monitor changes in banking and financial regulations, as these can impact Lloyds’ operations and profitability;
Portfolio review: Look at how Lloyds stock is performing compared to the rest of your portfolio and consider if any rebalancing is required.

While these methods can assist you in managing your portfolio, note that all investments carry inherent risks.

Should I buy Lloyds shares?

Whether investing in Lloyds is the right choice for your investment portfolio depends on your risk appetite and investment goals.

In addition to examining the fundamental aspects of the company, you can also utilise technical analysis. This way, you can assess the performance of the stock and spot potential trading opportunities based on price movements and chart patterns.

This gauge below provides a quick technical analysis summary for LLOY stock over a specific period. If you are proficient in technical analysis, this tool can expedite trading decisions by presenting real-time suggestions from widely recognised technical indicators like moving averages and oscillators.

Disclaimer: TradingView does not recommend trading financial instruments based exclusively on the advice of the Technical Rating indicator. These recommendations cannot predict future movements and are meant as assistance for spotting potentially favourable buy/sell conditions if this is consistent with their strategy.

Common mistakes to avoid when investing in the stock market

Here are some common mistakes to steer clear of when investing in the stock market:

Failing to research the company;
Not setting clear financial goals;
Attempting to time the market;
Failing to diversify;
Allowing emotions to dictate your investment decisions.

How to sell Lloyds shares?

If you notice Lloyds performing differently than expected, you may decide to dispose of your shares.

To do this, simply:

Sign in to your brokerage account;
Navigate to the detail page for Lloyds;
Input the number of shares or the monetary value you’d like to offload;
Hit the sell button.

Pros and cons of buying Lloyds shares

To determine whether Lloyds and, by extension, the banking sector, is a solid long-term investment, let’s delve into the pros of cons:

Pros

Established brand and market position: Lloyds is one of the oldest and most recognized banking brands in the UK, with a significant customer base;
Income-generating: Lloyd’s is a dividend-paying company with a forward annual dividend yield of 5.28% as of January 3, 2024;
Diversified Business: Lloyds operates in various business sectors, including retail and commercial banking, as well as insurance, which can offer some level of protection against downturns in any one area;
Strong regulation: The banking sector is among the most stringently regulated, a reality that was further amplified by the aftermath of the 2008-2009 economic meltdown. Currently, banks are mandated to uphold specific minimum capital levels as well as undergo “stress testing” to evaluate their capacity to endure adverse macroeconomic conditions.

Cons

Competition: The fintech industry has exploded in recent years and created tons of competitive pressure on traditional banks, threatening Lloyds’ market share;
Sensitivity to recessions: Banks depend on consumer spending and borrowing for their profits, which decline during economic downturns. Additionally, more consumers might struggle with debt repayments during these periods, leading to potential loan losses for banks;
Interest rate risk: In short, banks generate income through a straightforward mechanism: they accept deposits, provide loans, and earn from the difference in interest rates. As a result, a decline in interest rates usually tends to hurt the bank’s profits.

In conclusion

Given its robust market standing, diversified business model, and potential for dividends, Lloyds presents an attractive investment opportunity. However, investors must remain mindful of its challenges. Some of these include competition from emerging fintech players and digital banks and potential economic headwinds impacting banking activities.

As a result, it’s essential to conduct thorough research. Also, if necessary, consult with a financial advisor before making a decision. The goal is to make an informed decision that aligns with your financial objectives and risk profile.

FAQs about buying Lloyds shares