Barclays (LSE: BARC) shares have been among the many easiest performers on the FTSE 100 final 12 months, virtually doubling in worth as buyers took a constructive have a look at UK banking.

This 12 months the journey has been bumpier. Few shares rise in a straight line eternally, and might idle after such a spectacular run.

Barclays has largely dodged the motor finance mis-selling scandal, that’s hit Lloyds a lot more durable, however it’s a reminder that banks all the time carry a little bit of danger. That features the current Barclays IT outage.

Banks have additionally been threatened by expectations that rates of interest will proceed to slip this 12 months. Decrease charges may increase mortgage demand and sign the top of the cost-of-living disaster. However they might additionally squeeze internet curiosity margins. They measure the distinction between what banks pays savers and cost debtors, and it is a key profitability metric.

Can this inventory proceed to thrive?

After which there’s Donald Trump. His sweeping commerce tariffs have unleashed a recent wave of inventory market volatility and British banks aren’t immune. 

But there’s an opportunity Barclays’ funding financial institution would possibly truly profit from all of the turmoil, as buying and selling exercise surges.

Regardless of this 12 months’s ups and downs, Barclays shares are up a stable 9.55% to date this 12 months. Somebody who invested £10,000 when markets opened in January would now have £10,955. That’s a tidy £955 acquire. Not dangerous given at this time’s uncertainty, however hardly wonderful both.

Barclays shares nonetheless look good worth, buying and selling at simply over eight occasions earnings. The price-to-book ratio is simply 0.6, suggesting the inventory continues to be undervalued.

Right now’s dividend yield sits at 2.87%, which is pretty modest for a FTSE financials inventory lately. That’s partly as a result of the share price has climbed a lot.

Wanting forward, analysts count on the dividend yield to rise to three.13% this 12 months and three.49% subsequent 12 months. That’s the fantastic thing about dividend shares, a rising revenue presents a pleasant buffer in opposition to inflation. Assuming dividend development is maintained.

On condition that Barclays payouts are lined greater than 4 occasions by earnings, they should be among the many most secure on the FTSE.

In February, the board confirmed its dedication to shareholders by saying an additional £1bn share buyback. 

Dividends, development and buybacks

In February, Barclays posted a 24% rise in 2024 pre-tax income to £8.1bn, boosted by sturdy development in funding banking and UK lending. 

It additionally lifted its 2025 return-on-equity goal to 11%. These outcomes have been issued earlier than Trump turmoil, and the world is a really completely different place at this time. The UK financial system is struggling for different causes, too.

Working margins are forecast to rise from 30.3% to 37.4%, although, suggesting additional hopes of progress.

The 16 analysts protecting Barclays have a median one-year share price forecast of 358p. In the event that they’re proper, that’s a acquire of simply over 22% from at this time’s 292.45p.

Throw within the dividend and that’s a possible whole return of about 25%. In fact forecasts are by no means set in stone, particularly at this time.

Barclays shares have risen virtually 45% over one 12 months and 230% over 5 years. They might have additional scope to develop. Larry Fink, CEO at BlackRock, has simply tipped UK banks for a powerful comeback.

The world would possibly lastly be waking up to Barclays’ potential. Solely time will inform. However I nonetheless assume the shares are nicely value contemplating for long-term development and revenue.