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While some may label it premature, I’m already planning for 2024. It’s been a torrid few years for us retail investors. We’ve seen trillions wiped off the market due to the pandemic. And since then, we’ve battled with inflation levels not seen in decades.
However, like the optimist I am, I think 2024 may be the year we begin to see the stock market make a solid recovery. That’s why I’m targeting Lloyds (LSE: LLOY) shares.
Lloyds performance
I’ve long advocated Lloyds as a smart buy. However, looking back at its performance in recent years I can see why someone would question this.
Five years ago, a share in the Black Horse bank cost 58p. As I write, I could pick one up for 42p.
In the last 12 months, the Lloyds share price has offered some stability, falling less than a percent. However, a 10% drop this year reinforces the dire period it’s been through.
Not all down and out
However, as a Fool, I’m viewing this lull as an opportunity to snap up some quality shares for cheap. Here’s why I’m attracted to Lloyds.
Firstly, while racing inflation and hiked interest rates have wreaked havoc on markets, Lloyds has benefited from this. In its half-year results, net income saw a significant rise, fuelled by a large jump in its underlying net interest income.
This is because raised rates allow the business to charge customers more when borrowing. And with interest rates expected to remain at high levels in 2024 and potentially beyond, it looks like the firm will continue to be handed a boost in the times ahead.
Passive income opportunity
I’m also a fan of Lloyds given the passive income opportunity it presents. As I continue to build up my portfolio, I’m targeting high-quality stocks with upside potential, and a strong dividend yield. And Lloyds fits the bill.
As I write, the stock provides a yield of just under 6%, which tops the FTSE 100 average of between 3-4%. While it doesn’t quite beat inflation, it certainly trumps me leaving my cash stagnant in the bank.
I’m always wary of dividends, as they can be cut at any time by a business. However, with Lloyds’ payout covered around three times by earnings, it looks safe. What’s more, current forecasts project an expected pay out of 3.11p a share for 2024, equivalent to a 7.3% yield a today’s price.
Long-term vision
Weighing up the stock as a long-term investment, I’m also pleased to see the moves the bank is making for its future. This exists largely via the recent £3bn investment announced by CEO Charlie Nunn, which is expected to be taken out over the next three years. As part of this, the business plans to diversify its revenue streams.
What I’m doing
With its sole focus on the UK, Lloyds may be at greater risk than some of its competitors. And ongoing inflation could impact the stock’s performance.
However, I’m not worried about this. I think we’ll begin to see a strong rebound in 2024. And I fully expect Lloyds to be one of the stocks leading the charge.
Should I have some spare cash in the weeks ahead, I’ll be looking to top up my holdings.
