Lloyds Banking Group (LSE: LLOY) has experienced an impressive surge in its share price over the past year, rising from 47p to 72p—a notable 53% increase. With robust momentum and a shareholder-friendly approach, the stock has captured the attention of many investors. However, the big question is: Can Lloyds continue to deliver strong returns, or will fintech disruptors like Wise (LSE: WISE) offer better long-term potential?
Lloyds’ Solid Performance and Growth Outlook
Lloyds has several factors in its favor:
- Rising Profits: Analysts forecast a steady increase in earnings per share (EPS), from 6.3p in 2024 to 7.1p in 2025 and 9.1p in 2026, signaling healthy growth.
- Attractive Dividend Growth: The bank has announced a 15% dividend hike to 3.17p per share for 2024, offering an appealing 4.4% yield—higher than typical savings accounts.
- Aggressive Share Buybacks: With a £1.7bn buyback program, Lloyds aims to boost EPS and support further share price growth.
- Bullish Market Trend: The stock remains in a strong uptrend, often a positive indicator for continued momentum.
Despite these positives, Lloyds’ performance is closely tied to the UK economy, which is currently facing sluggish growth and uncertainty. This raises concerns that its future gains might be limited compared to higher-growth opportunities.
Why Wise Could Outperform Lloyds
For investors seeking superior long-term returns, Wise presents a strong alternative. As a global fintech company specializing in international money transfers, Wise operates in over 70 countries, giving it a major advantage in scalability over Lloyds, which is largely UK-focused.
Key Advantages of Wise:
- Global Reach: Wise’s international presence offers almost limitless growth potential, expanding into new markets and developing innovative products.
- Fintech Disruption: As digital banking and fintech reshape the financial landscape, Wise is well-positioned to capture market share from traditional banks like Lloyds by offering lower fees and faster transactions.
- Revenue Growth: Wise’s scalable model offers significant earnings growth potential, making it an attractive option despite a higher price-to-earnings (P/E) ratio of 28.
Which Stock Is the Better Buy?
While Lloyds offers steady income and recent momentum, its growth potential may be constrained by the UK economy’s performance. Wise, with its global expansion opportunities and scalable business model, is better positioned for long-term growth, making it a more compelling choice for investors seeking higher returns.
