Lloyds Banking Group (LSE: LLOY) has shown remarkable growth over the past year, with its share price climbing from 47p to 72p—a significant 53% increase. The strong performance, bolstered by favorable shareholder policies, has drawn the attention of investors. However, with the rise of fintech disruptors like Wise (LSE: WISE), the question arises: Is Lloyds still a top pick for long-term returns, or could newer players outperform in the future?
Lloyds’ Impressive Growth and Stability
Lloyds’ solid performance is backed by several positive factors:
- Rising Profits: Earnings per share (EPS) are projected to grow from 6.3p in 2024 to 9.1p in 2026, indicating strong profitability ahead.
- Attractive Dividend Growth: The bank has recently announced a 15% dividend increase to 3.17p per share for 2024, offering a solid 4.4% yield—appealing for income-seeking investors.
- Aggressive Share Buybacks: Lloyds has committed to a £1.7 billion buyback program, likely boosting EPS and supporting further share price gains.
- Bullish Market Trend: The stock is riding a strong uptrend, which can often continue longer than expected.
While these factors present an optimistic outlook, Lloyds’ growth remains heavily tied to the UK economy. With slow economic growth and ongoing uncertainties, the bank’s performance might be constrained compared to emerging high-growth opportunities in the fintech sector.
Why Wise Could Be a Better Long-Term Investment
For investors looking for more substantial long-term returns, Wise (LSE: WISE) stands out as an exciting alternative. As a leading global fintech specializing in international money transfers, Wise operates across over 70 countries, significantly reducing its reliance on the UK economy.
Key reasons Wise could outperform Lloyds include:
- Global Scalability: Wise’s international presence provides vast growth opportunities, unlike Lloyds, which is largely limited to the UK.
- Fintech Disruption: The rise of digital banking and fintech services is shifting the financial landscape. Wise, offering lower fees and faster transactions, is challenging traditional banks like Lloyds.
- Market Share Growth: Wise is well-positioned to capture market share from traditional banks, especially in international payments where it offers more efficient and cost-effective solutions.
- Strong Revenue Growth: With its scalable business model, Wise’s earnings potential far exceeds that of Lloyds, justifying its current valuation.
Which Stock Should You Choose?
While Lloyds offers steady income and recent positive momentum, its growth prospects are limited by the UK’s economic challenges. On the other hand, Wise is positioned for significant expansion in the fintech space, making it an appealing choice for investors seeking high long-term returns.
