If I’d invested £10k in Lloyds shares 10 years ago, here’s how much I’d have now!

Lloyds (LSE:LLOY) shares continue to be some of the most popular UK stocks to own. They’re often found inside a vast range of professionally managed portfolios as well as personal ones. And it certainly sounds like a sensible investment on paper. After all, the bank plays a vital role in the British economy with also a trillion pounds worth of assets making it seem like a ‘safe’ pick.

But despite its popularity, has it actually been rewarding the last decade? Let’s take a closer look.

Popularity doesn’t always equal growth

In March 2014, Lloyds shares were trading at around 74p. Today, they’re closer to 50p – a 32% drop in valuation. To be fair, we have just come out of a fairly severe stock market correction. So, some of this decline could end up reversing itself as the stock market slowly recovers. Yet, even after factoring this in, there’s no denying that the banking stock has underperformed.

Of course, movements in the firm’s share price are only one part of the puzzle. One of the main attraction points of this business is its dividend. After all, regularly receiving interest payments on issued loans provides a fairly reliable stream of cash flow that can fund a dividend. So, how much have investors received over the years?

Ignoring the hiccup triggered by the 2020 pandemic, Lloyds has seemingly proven its ability to systematically raise shareholder payouts. And a total of 20.66p has been delivered to shareholders. Compared to the initial 2014 price of 74p, that represents a 28% gain, offsetting a large chunk of the loss incurred from the tumble in stock price. And if investors chose to reinvest any dividends received, they would have even made a small gain.

However, compared to other stocks in the FTSE 100, Lloyds shares haven’t exactly been a spectacular investment, especially when taking inflation into consideration. So, is Lloyds a bad stock to buy now? Not necessarily.

Why it might be worth buying today

The last decade has been pretty tough for most banks. After all, these businesses rely on interest rates to make money, and operating in a near-zero percent environment isn’t exactly conducive to that. Obviously, today’s landscape is vastly different. And we’ve already started seeing early signs of margin expansion at the bank.

Having said that, the Bank of England is also seeking to cut interest rates just as soon as inflation is back under control. And while I doubt they will return to near-zero levels, the bank is likely to once again face margin pressure in the short-to-medium term. So, what’s the right move?

Lloyds is no longer a high-growth enterprise. As a defensive business, its shares have primarily functioned as a method of protecting existing wealth rather than expanding it. Therefore, whether the stock belongs in a portfolio ultimately depends on the financial goal of an individual investor. Personally, I’m still firmly in the growth camp. As such, Lloyds shares aren’t all that tempting for my portfolio.