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After hitting an all-time high in February, the UK FTSE 100 Since then, the index has fallen 8.4%. However, some stocks have fared much worse during this latest bout of market weakness. For example, Barclays (LSE:BARC) shares have soared strongly since peaking this spring.
Barclays shares plummet
The FTSE 100 reached an all-time high of 8,047.06 points on February 16. Subsequently, on March 8, the Barclays share price hit a 52-week high of 198.86 pence. But then a crisis among mid-sized American banks caused stock prices to fall around the world.
By March 20, shares in Blue Eagle Bank had plummeted to an intraday low of 128.12 pence. Following this drop, they recovered strongly and closed at 161.46 pence on September 15. Unfortunately, everything has gone downhill since then.
As I write (close to market close on Thursday), the Barclays share price sits at 132.14p. This is just 3.1% above its 2023 low, valuing the clearing bank at less than £20 billion. How the once mighty have fallen.
Barclays lags FTSE 100
This is how the bank’s shares have performed against the main London market index over six periods:
| change | 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 chart shows that Barclays shares have persistently underperformed its blue-chip benchmark index. In fact, the bank’s stock has produced negative double-digit returns in every period from five days to five years. Oh.
Seeking deep value
That said, the figures above exclude dividends – regular cash payments that many companies make to shareholders. However, future dividends are not guaranteed and therefore may be cut or canceled at any time.
Separately, my second table shows how Barclays’ dividends have increased since they were canceled during the 2020/21 Covid-19 crisis:
| Financial year | 2023 | 2022 | 2021 | 2020 |
| Final dividend | to confirm | 5 pm | 4p | 1 p |
| Interim dividend | 2.7p | 2.25p | 2 P | – |
| Total dividend | 2.7p to date | 7.25p | 6 p.m. | 1 p |
In 2022, Barclays’ board increased its dividend by 1.25 pence, a hefty 20.8% increase on the 2021 payout. Additionally, the bank increased this year’s interim cash payout by exactly a fifth ( 20%), up to 0.45 pence.
What’s more, if the same increase were applied to the final 2023 dividend, the total payout would rise to 8.7p. Taking into account the current share price of 132.14 pence, this translates into a juicy dividend yield of almost 6.6% per year.
What’s next for Barclays shares?
In July 2022, my wife and I bought Barclays shares for our family portfolio for 154.4pa. Therefore, we are suffering a paper loss of 22.26 pa share, which is equivalent to a loss in value of 14.4%.
Although this decline is far from ideal, we buy this stock for its decent dividends. Therefore, I am not interested in selling shares at levels close to current ones. In fact, if I had money to spare, I would buy many more Barclays shares at these bargain prices.
Finally, I expect this stock to trade at much higher levels in five years. That said, I also imagine that owning Barclays until 2028 could be a bumpy road, driven by market volatility and changes in interest rates.
