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NatWest (LSE: NWG) shares have loved one other smashing 12 months, rising 55% within the final 12 months. Over 5 years, they’re up an unbelievable 265%, with dividends on high. Can this fabulous run proceed into 2026?
I may ask the identical query about two different FTSE 100 banks: Barclays (LSE: BARC) and Lloyds Banking Group (LSE: LLOY), as a result of they’ve been scorching too.
Purple-hot FTSE 100 sector
The Barclays share worth is up 67% this 12 months and 212% over 5. Lloyds’ shares, which I personal, have performed even higher, rising 72% over the past 12 months, though it’s taking part in catch-up after lagging in 2024. Over 5 years, Lloyds’ shares are up 161%. Once more, all dividends come on high.
It’s taken a very long time to get right here. All three banks had been hammered by the monetary disaster and took greater than a decade to piece themselves again collectively. Many Britons nonetheless haven’t forgiven or forgotten the bailouts, and there are common requires windfall taxes on earnings. The sector already pays a 3% surcharge.
From an funding standpoint although, they’re doing brilliantly. With dividends restored and earnings booming, traders have piled again in.
NatWest posted an working revenue of £6.2bn in 2024 and rewarded shareholders with a 26% dividend hike. The remaining taxpayer stake has now been cleared, giving the shares one other raise.
On 25 July, first-half outcomes confirmed additional progress. NatWest added 1.1m new prospects, earnings per share jumped 28%, and the board felt assured sufficient to approve a £750m share buyback. The interim dividend was lifted 58% to 9.5p per share.
The board plans to return round half of attributable revenue as odd dividends, with buybacks on high the place applicable. The forecast yield for full-year 2025 is 5.05%, rising to five.48% in 2026. With a trailing price-to-earnings ratio simply over 12, the shares nonetheless look fairly priced.
Buybacks, earnings and progress
Barclays has an identical story to inform. In 2024, it made a pre-tax revenue of £8.1bn, up 24% 12 months on 12 months, and returned £3bn to shareholders, alongside asserting a recent £1bn buyback. The trailing dividend yield is decrease at 1.86%, however the board plans to focus extra on buybacks. The P/E can be round 12.
Income at Lloyds dipped 19% in 2024 to £4.5bn, largely on account of a £1.15bn provision for motor finance mis-selling. A proposed £1.7bn buyback quickly cheered traders. Lloyds is the priciest of the three on a P/E of 15, whereas the trailing yield has slipped to three.35% because the share worth has surged. The most recent interim dividend was hiked by 15%, and buybacks ought to preserve the investor rewards flowing.
£10,000 in NatWest a 12 months in the past would have seen a complete return of 59.37%, together with dividends, turning it into £15,937. Barclays would have turned £10k into £16,851, whereas Lloyds would have delivered £17,492, helped by that catch-up rally.
These are stellar returns, however traders can’t anticipate to see that sort of efficiency yearly. 2026 may very well be bumpier, particularly if markets crash or a worldwide recession hits. Falling rates of interest are additionally more likely to squeeze internet curiosity margins and earnings.
Even so, all three nonetheless look price contemplating with a long-term view, so long as traders mood their expectations. If markets dip, they might look irresistible.
