the richest man in atherstone

Lloyds TSB announced an interim dividend of 11.2p this week, an increase of 5% from previous years.

Regular readers will know that I recently bought 171 Lloyds TSB shares at £5.76, so this along with reading the favourable interim results comes as welcome news to me. It reinforces my belief that the company is heading in the right direction and because Lloyds TSB has not risen its dividend for 5 years I feel very confident with my investment.

The 11.2p interim combined with a projected final dividend of at least 23.5p is an annual dividend of 34.7p, which equals a 6.02% yield (5.14% after tax). With 171 shares, I can expect to earn a shade over £59 for the year on a £985 investment.

However, I am quite perplexed as to why the share price is currently £5.54. In my opinion it should be worth around £6, but that's the way markets work I suppose. It's not a trendy stock but the historical performance shows that it is a good investment vehicle. In fact, if I had some cash to spare I would probably buy up a bigger stake - I'm actually toying with the idea of using some of my 'Emergency Fund' to do this.