I’m concentrating on a £1,730 annual revenue from £10,500 in Lloyds shares – Imperial Wire

Certainly one of my finest latest funding selections was placing £4,000 in Lloyds (LSE: LLOY) shares in 2023, inside a SIPP. Though in a single respect it was my worst. I ought to have invested an entire heap extra.

Like the remainder of the FTSE 100 banks, Lloyds Banking Group has had a terrific run. The entire sector has benefitted from greater rates of interest, which have allowed banks to widen web curiosity margins, the hole between what they pay savers and cost debtors.

Lloyds has been making loads of cash. Pre-tax revenue rose 12% to £6.7bn in full-year 2025, up from £5.97bn in 2024. The board made certain buyers have shared in that success, with whole distributions of £3.9bn, comprising dividends and share buybacks.

Booming FTSE 100 sector

There have been bumps alongside the best way, as at all times. The largest was the motor finance mis-selling scandal, which hit Lloyds more durable than its main rivals as a consequence of its publicity by means of the Black Horse division. However the Lloyds share value is up 64% over the past 12 months and 150% over two. Personally, I’m up 127% from share value development alone, with dividends on prime.

My unique £4,000 purchased me 9,259 shares at a median value of round 43p every. At this time, Lloyds shares are value roughly 103p apiece.

I’ve additionally reinvested each dividend I’ve acquired, which has purchased me a further 981 shares to this point, lifting my whole stake to 10,240. This good mixture of development and revenue has remodeled my £4k into £10,552. That’s a complete return of 164%. Not dangerous in underneath three years.

The following dividend hits my SIPP on 19 Could and will likely be value 2.43p per share. That ought to hand me one other £250 or so, and I don’t must do something to obtain it. That’s the enjoyment of producing passive revenue from FTSE dividend shares. Dividends like that hit my SIPP twice a 12 months routinely, though they’re by no means assured. Lloyds has to generate the money to pay them.

Buybacks, dividends, development

The trailing yield has fallen to round 3.5% because of the hovering share value, however ought to revive over time. The board stays beneficiant, lifting the latest interim payout by 15%. The ahead yield for 2026 is 4.1%.

I’m round 10 years away from my probably retirement date. If that ahead yield of 4.1% grows at 15% yearly, my £10,500 stake could possibly be value £21,991 after a decade. That’s simply from reinvested revenue. If the share value additionally grows at 7% a 12 months on common, the entire worth might hit £43,260.

With a 4% yield, that will doubtlessly produce round £1,730 a 12 months in dividends, which I might draw as retirement revenue with out touching my capital.

In fact, my figures are speculative. Earnings might gradual, markets might crash, falling rates of interest might squeeze margins. This might hit each dividends and share value development. There are at all times dangers when shopping for shares however I nonetheless imagine Lloyds is effectively value contemplating, with a long-term view.

That’s why I’ve constructed a balanced portfolio of FTSE 100 dividend development shares like this, so if one underperforms, others can hopefully compensate. However my calculations present how investing in FTSE 100 blue-chips for the long term can construct real wealth. Not simply by means of share value development, however dividend revenue too.