Lloyds Banking, NatWest et al likely to drive their dividend yields back above 5% within a couple of years

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Talk of a £22bn dividend bonanza in the banking sector might be a bit far-fetched but based on broker forecasts, we can at least expect dividend yields to be above the FTSE 100 average by next year. It is probably going to take a couple of years but dividend yields on UK banking shares are set to top 5%, according to broker forecasts. The 's financial stability report published on Tuesday finally removed what the central bank called the “extraordinary guardrails on shareholder distributions” imposed at the time of greatest uncertainty over the coronavirus epidemic in the UK. In theory, the BoE's green light could see the banks jam the foot on the accelerator pedal and ramp up dividends at the old hurry-up. The broker Jefferies has calculated that the banks could “repatriate” around 30% of their market capitalisation between now and 2023 without causing the any alarm over balance sheet strength. READ Bank of England gives mixed signals on bank dividends, SME deb
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