Better buy: Lloyds vs Greggs shares

It feels like 2008 all over again. Yet, Lloyds (LSE: LLOY) shares have held up well so far.

The dividend yield at Lloyds Banking Group is 5.7%. Is it time to top-up ownership in this bank?

Retail banks can be seen as leveraged bond funds. Regulators have been pushing retail banks to buy more “safer” bonds since the 2008 financial crisis.

The bond is trading lower in today’s market.

Lloyd’s of London insurance market alone had a pre-tax loss of £800m. The loss was caused by a £3.1bn decline in the value of the investment portfolio.

Now guess what these investment portfolios are generally made of?

Government bonds…

Silicon Valley Bank (SVB) received unwanted attention from the financial markets after realizing losses by selling bonds.

Now the market is playing a game of whack-a-mole

All these regulations and the compliance rules added since 2008 have solved nothing.

If the bank’s stock price falls significantly, depositors start withdrawing their money.

Every bank is reached to the eye, and no one can live in the bank.

Fortunately, Lloyds Banking Group still has the confidence of the market. I am a happy long-term shareholder.

I will not add to the position, however.

The bank’s management issued dividends in recent years. Dividend crop stocks tend to underperform their average going forward.

As seen in 2008, banks can go from hero to zero very quickly. My investments in broad stock market ETFs give me more than enough exposure to banking stocks. No need to double.

Shareholders’ property rights are not currently valued highly in the banking sector.

SVB UK owners get £1 for their trouble. Some banks call it un-investable as a result.

Wall Street versus Main Street

The king of sausage rolls on the high street in the UK is Greggs (LSE: GRG). The dividend yield is lower at around 2.4% excluding special dividends.

Lockdown is a risk for this stock. In 2020, investors should open without a dividend from Greggs.

The popular pastry chain has raised the price of its sausage four times from 2021 from £1 to £1.20 now. Still, the bakery chain has a good value proposition compared to the likes Starbucks and Pret a Manger.

The company has pricing power. The price of this stock is from 23.

Greggs is working hard in 2022 to effectively stop. The upside from higher sales is being eaten up by higher costs.

Extended opening hours could increase sales this year.

At the same time, the impact of higher tax rates on profits is negative.

Have a sausage roll and eat

I’d rather buy more shares in Greggs than Lloyds.

In the sell-off market, these investors will try to take some more shares in the sausage-roll maker. Shares are not cheap enough for me in today’s rush

Now, I’ll buy a sausage roll at the grocery store!