LloydsThe (LSE: LLOY) stock has had a great run. Over the last three years, their value has more than doubled, especially dividends. Now they are slipping (along with most FTSE100), while investors worry about the war in Iran. Is this a chance to buy at a lower price?

I bought in 2023 and my timing was right. I have about 130% growth after reinvesting dividends. That’s much better than expected from a bank often dismissed as low-growth, offering a steady stream of income but only moderate growth potential.

Lloyds is currently focused solely on the UK. It is narrow to the basic elements of everyday banking, such as mortgages, savings and business loans. The bank lacks international character, but it generates solemn profits and, after rebuilding after the financial crisis, is focused on rewarding shareholders.

Growth, income and buyouts

Given current events, full-year results released on January 29 make it seem like a long time ago. Lloyds reported better-than-expected profit growth of 12% to £6.7 billion and offered some confident outlook. The board has set a target to boost actual return on equity from 12.9% to 16% by 2026. It also announced a £1.75 billion share buyback and increased the final dividend by a generous 15% to 2.43p per share.

At the time, there was concern that falling interest rates would reduce net interest margins, or the difference between bank lending rates and deposit rates. This is no longer a problem as interest rates rise more often than they fall. This could maintain margins, but investors have much more to worry about today.

As the UK’s largest mortgage lender (through its Halifax subsidiary), Lloyds is exposed to higher borrowing costs and weaker housing demand. The slowdown could boost the number of defaults, forcing the bank to set aside more money for bad loans.

The Lloyds share price has fallen by 9% in the last month. It’s quite modest. Rival Barclays is down 16% as its exposure to higher-risk areas such as private lending increases its volatility. Lloyds may look dull, but in this climate that could work to its advantage. Its shares are still up 30% on the year.

Lower valuation, higher profitability

Before the Iran conflict, Shore Capital suggested Lloyds shares were fully valued after a robust run. They look more reasonable now. The forward price-to-earnings ratio for 2026 is 9.7. Similarly, profitability decreased as the share price increased.

Currently, the yield on the forward contract for 2026 is 4.5%, and in 2027 it will reach an impressive level of 5.3%. Of course this is not guaranteed. Lloyds may struggle to deliver another large dividend hike to investors if today’s turmoil weighs on profits.

On April 9, the shares will be included in the dividend-free system. Investors who purchase early will qualify for a final payout of 2.43p, payable on May 19. Should they act?

At a price of around 95p per share, a £5,000 investment would buy around 5,263 shares and generate around £127 in this payment alone. This is just the starting point – two dividends paid each year. The recent decline appears to be an opportunity for Lloyds to rebound at a more attractive valuation and improved profitability.

The short-term situation seems extremely volatile, but for long-term investors I think Lloyds is worth considering at today’s price.