After years of stagnation, Lloyds (LSE: LLOY) share price is finally giving investors something to celebrate. I think there are even more emotions ahead.

Lloyds shares have fallen for years after the 2008 financial crisis as the traumatized banking sector tried to pick up the pieces. There was a strange rise in stock prices during this time, but it never led anywhere.

The pain lasted too long. Lloyds started paying dividends again. Profitability exceeded 5%. The company was making billions. Its shares were dirt budget-friendly, yielding only five or six times earnings. But investors didn’t want to know.

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I finally decided this couldn’t go on and bought the stock last year. I’m cheerful I did it.

The share price is up 28.35% over the last 12 months. Including dividends, the total return is heading towards 35%. And I think that’s just the beginning.

I thought Lloyds shares would go up a lot when central bankers finally started cutting interest rates, but that hasn’t happened yet.

This means that investors can still earn up to 5% from cash and bonds while taking little or no risk with their capital. This makes dividend stocks seem a little less tempting because the risk is higher.

When central bankers like the US Federal Reserve and the Bank of England finally decide they have beaten inflation, they will start cutting interest rates. At that point, cash and bond yields will fall. However, Lloyds yields will not fall. Quite the opposite.

Lloyds shares currently have a trailing yield of 5.04%. This is forecast to reach 5.37% in 2024 and 5.9% in 2025. At this point, savings rates and bond yields could be heading towards 3%.

Great for dividend income

When that happens, the money should turn into shares like Lloyds. And the share price should rise, if I’m not mistaken. As always with investing, there are no guarantees.

Falling interest rates won’t be good news. It will squeeze Lloyds’ net interest margin, the difference between what it charges borrowers and what it pays savers. It’s a key measure of the company’s profitability, and it’s already starting to narrow.

But lower rates will be good news for banks in other ways, limiting the impairment of debt, boosting the housing market and putting money into people’s pockets. What’s more, the UK economy is also growing faster than expected.

There are other risks. We still don’t know how the motor finance mis-selling scandal will end. Lloyds has earmarked £450m to cover claims costs. There could be a lot more on the line.

However, looking long term, I think the stock still looks like a good value at 9.52 times forward earnings. They’re not as budget-friendly as when I bought them last year, but I’ll still contribute when I have the cash. Increasing profitability and share price recovery are irresistible to me.