Lloyds Banking Group (LSE: LLOY) has seen impressive share price growth over the past year, surging from 47p to 72p—a substantial 53% gain. With strong momentum and shareholder-friendly policies, the stock continues to attract attention. However, looking ahead, are Lloyds shares still a top pick, or could fintech disruptors like Wise (LSE: WISE) offer better long-term returns?
Lloyds’ Strong Performance and Growth Potential
Lloyds has several key factors working in its favor:
- Rising Profits – Analysts project earnings per share (EPS) to increase from 6.3p in 2024 to 7.1p in 2025 and 9.1p in 2026, indicating a promising earnings trajectory.
- Attractive Dividend Growth – The bank recently announced a 15% increase in its total dividend to 3.17p per share for 2024. At current prices, this equates to a solid 4.4% yield—higher than most savings accounts.
- Aggressive Share Buybacks – Lloyds has committed to a £1.7bn buyback program, which could further enhance EPS and support share price appreciation.
- Bullish Trend – The stock remains in a strong uptrend, and momentum can often persist longer than expected.
While these positives paint an encouraging picture, Lloyds’ performance is heavily tied to the UK economy. With sluggish economic growth and ongoing uncertainties, the bank’s future gains may be limited compared to other high-growth opportunities.
Why Wise Could Outperform Lloyds
For investors seeking superior long-term returns, Wise (LSE: WISE) presents an exciting alternative. As a leading global fintech specializing in international money transfers, Wise operates in over 70 countries and is not dependent on the UK economy.
Key Reasons Wise Could Deliver Higher Returns:
- Global Scalability – Unlike Lloyds, which is largely confined to the UK, Wise has an almost limitless growth runway. Its international presence allows for continued expansion into new markets and the development of innovative financial products.
- Fintech Disruption – The financial landscape is shifting towards digital banking and fintech services. Traditional banks like Lloyds are losing ground to tech-savvy players like Wise, which offer lower fees and faster transactions.
- Market Share Gains – Wise has the potential to capture business from traditional banks by providing more competitive international payment solutions. Lloyds’ current offerings in this space are far less efficient and cost-effective.
- Revenue and Earnings Growth – Wise’s earnings potential far exceeds Lloyds due to its scalable business model. Despite a current price-to-earnings (P/E) ratio of 28, strong revenue growth could justify its valuation in the long run.
Which Stock Is the Better Buy?
While Lloyds offers steady income and recent momentum, its growth potential is restricted by the UK’s economic outlook. Wise, on the other hand, is positioned for explosive expansion in the fintech space, making it a compelling choice for long-term investors seeking higher returns.
Investors must weigh stability versus growth potential when choosing between these two stocks. For those seeking dividends and reliable performance, Lloyds remains attractive. However, for those looking for a high-growth disruptor with a global reach, Wise may be the better bet in the long run.
