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Govt paves way for Lloyds share sale as it banks £130m dividend

LLoyds

The Government has announced shares in Lloyds Banking Group could be made available to the public by next March.

Chancellor George Osborne announced in January  the proposed discount share sale of Lloyds would be delayed amid market turbulence.

But in a statement released yesterday, Treasury economic secretary Harriett Baldwin says the Government is still committed to offer shares to the public this financial year.

She says: “I am determined to build on this success by making Lloyds shares available to the public this year, so that we can build a share-owning democracy and continue to reduce our national debt.

“The Government is committed to launching a retail sale of Lloyds shares and to fully returning its stake to the private sector in 2016/17.”

Yesterday the Government announced it will receive a further dividend from Lloyds of £130m. This takes the total dividends received by the Government to £318m and the total recovered from Lloyds for taxpayers to over £16.8bn.

Hargreaves Lansdown senior analyst Laith Khalaf says the latest dividend reduces the Government’s break-even price on future sales by 2p to 70.5p.

He says: “At Lloyds, the job is almost done, and the bank is returning to business as usual, with the dividend tap being turned on in earnest this year. The retail share offer which is now planned for this tax year should be almost the final act in returning the bank to private ownership. Yesterday’s dividend is yet another step in the right direction for the bank.

“Things are not quite as rosy at Royal Bank of Scotland however, where US litigation and problems offloading Williams and Glyn mean it looks like it’s going to be 2018 at the earliest before the bank returns to something approaching normality.”

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Strong dollar can be a powerful driver of UK dividend growth in 2015

By Robin Geffen, fund manager and CEO 

This year threatens to be a challenging one for UK dividend hunters. Last year saw an all-time record amount paid out in UK dividends — some £97.4bn, according to research from Capita Dividend Monitor. Yet as Capita also pointed out, out the biggest single factor driving the growth in the fourth quarter of last year was easy to identify: the rising US dollar. 

In our view, this trend is much more than simply a one-quarter phenomenon. It is actually the most profound issue to get right as a UK equity income investor in 2015. We believe that the US dollar will continue to strengthen significantly from its current level. This is due more to the US economy’s demonstrable de-coupling from the rest of the world than to a view on the UK. The US has a strong chance of tightening monetary conditions this year without jeopardising growth or de-stabilising its housing market. The same can unfortunately not be said about the UK.