After hitting an all-time high in February, the UK’s FTSE 100 index has since dropped 8.4%. However, some stocks have done way worse during this latest bout of market weakness. For example, Barclays (LSE: BARC) shares have bombed hard since peaking this spring.
Barclays shares slump
The FTSE 100 peaked at a record high of 8,047.06 points on 16 February. Later, the Barclays share price hit a 52-week peak of 198.86p on 8 March. But then a crisis among mid-sized US banks sent stock prices plunging across the globe.
By 20 March, the Blue Eagle bank’s shares had collapsed to an intra-day low of 128.12p. Following this plunge, they then rebounded hard, closing at 161.46p on 15 September. Alas, it’s all been downhill since then.
As I write (nearing Thursday’s market close), the Barclays share price stands at 132.14p. This is just 3.1% above its 2023 low, valuing the clearing bank at under £20bn. How the once-mighty have fallen.
Barclays lags the FTSE 100
Here’s how the bank’s shares have performed against London’s main market index over six periods:
Change over
Barclays
FTSE 100
Difference
Five days
-10.0%
-1.7%
8.4%
One month
-17.3%
-3.3%
14.0%
Six months
-14.1%
-6.1%
8.0%
2023 to date
-16.6%
-1.3%
15.3%
One year
-11.8%
+4.5%
16.3%
Five years
-21.3%
+6.3%
27.6%
My table shows that Barclays stock has persistently underperformed its blue-chip benchmark. Indeed, the bank’s shares have produced double-digit negative returns over all periods from five days to five years. Yikes.
Digging for deep value
That said, the above figures exclude dividends — regular cash payouts made by many companies to shareholders. However, future dividends are not guaranteed and so can be cut or cancelled at any time.
Then again, my second table shows how Barclays dividends have risen since being cancelled during 2020/21’s Covid-19 crisis:
Financial year
2023
2022
2021
2020
Final dividend
TBC
5p
4p
1p
Interim dividend
2.7p
2.25p
2p
–
Total dividend
2.7p YTD
7.25p
6p
1p
In 2022, the Barclays board raised its dividend by 1.25p, a hefty uplift of 20.8% on 2021’s payout. In addition, the bank raised this year’s interim cash payout by exactly a fifth (20%) to 0.45p.
What’s more, were the same increase to be applied to 2023’s final dividend, then the total payment would leap to 8.7p. Based on the current share price of 132.14p, this translates into a juicy dividend yield of almost 6.6% a year.
What next for Barclays stock?
In July 2022, my wife and I bought Barclays shares for our family portfolio for 154.4p a share. Therefore, we are nursing a paper loss of 22.26p a share, equating to a loss of value of 14.4%.
Although this decline is far from ideal, we bought this stock for its decent dividends. Hence, I’m not interested in selling shares at anywhere near current levels. In fact, if I had cash to spare, I’d buy lots more Barclays shares at these bargain-basement prices.
Finally, I expect this stock to trade at much higher levels five years from now. That said, I’d also imagine that owning Barclays until 2028 could be a bumpy ride, driven by market volatility and changing interest rates!
The post Down 33% since March, Barclays shares look a screaming buy to me appeared first on The Motley Fool UK.
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More reading
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If I’d invested £5k in Barclays shares 10 years ago here’s what I’d have now
Cliff D’Arcy has an economic interest in Barclays shares. The Motley Fool UK has recommended Barclays. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services, such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a diverse range of insights makes us better investors.
