Lloyds share price nears pivotal level: is the 3.64% dividend yield worth it?

Lloyds Bank (LON: LLOY) share price has moved sideways this year as concerns about its growth and the British economy have remained. It was trading at 100.50p on Friday, inside the range it has remained at in the past few months. So, is it a good stock to buy for investors as its dividend yield remains at 3.65%.

Lloyds Bank’s business is doing well despite the weak UK economy

The UK economy has weakened in the past few years, with key industries like manufacturing being under intense pressure. The unemployment rate has remained above 5%, while inflation has remained at an elevated level in this period.

Most notably, the UK has missed the ongoing artificial intelligence hype, with only a handful of companies being recognized globally. Also, its public debt has continued to surge, and the political crisis is escalating. In a statement this week, Andy Burnham said that he would challenge Keir Starmer as the prime minister. 

Still, despite all these challenges, Lloyds Bank’s business has been relatively stable in the past few years, helped, in part, by the higher interest rates. The Bank of England (BoE) has maintained a 3.75% interest rate, and officials have hinted that they may hike this year if inflation remains at an elevated level. 

The most recent results showed that its net interest income rose to £3.56 billion in the first quarter from £3.29 billion in the same period last year. Its other income rose by 11% to £1.6 billion, bringing its net income to £4.78 billion. 

Most notably, its profitability continued to soar during the quarter. Its underlying profit jumped by 31% to £2 billion, while the statutory profit after tax rose by 37% to £1.5 billion. 

These numbers will likely continue improving as UK bond yields rise. Data shows that the ten-year Gilt yield stands at 4.90%, much higher than the year-to-date low of 4.223%. The two-year yield rose to 4.3%. 

At the same time, there are signs that the company has concluded handling the motor vehicle insurance issue that drained billions from its books. 

Lloyds Bank continues to return cash to investors through dividends and share buybacks. For one, it continues to progressively move its CET1 ratio to 13% from the current 13.4%. This figure has been moving downwards in the past few quarters.

The company is also continuing to reduce the number of shares in circulation by repurchasing stocks worth up to 1.75 billion pounds. Share repurchases aim at boosting the EPS by reducing those in circulation.

Lloyds share price technical analysis

LLOY stock chart | Source: TradingView

The daily chart shows that the LLOY stock price has remained inside a narrow range in the past few months. It has formed a symmetrical triangle pattern whose two lines are nearing their confluence level, where most rebounds or crashes happen.

The stock is supported by the 100-day Exponential Moving Average (EMA) and is stuck at the Major S/R Pivot Point of the Murrey Math Lines. Therefore, these technicals suggest that the stock will rebound in the near term, potentially moving the strong pivot reverse level of 106.26p. 

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