What's going on?

Shares in Lloyds Banking Group, the British high street bank, jumped 10% on Thursday as it announced a surprise special cash payment to its shareholders � it was the bank�s biggest one-day gain in 5 years.

What does this mean?

Lloyds had to bebailed out by the UK government during the financial crisis in 2008, but the government has sold most of its 43% stake back to the public (it now owns 9%). Lloyds announced that it will start giving its shareholders an annual cash payment (a.k.a. a dividend � which is explained in our glossary). It also announced a �special dividend,� e.g. a one-off payment to its shareholders – presumably because it determined it had enough cash on hand and wanted to reward its shareholders. Many now expect the bank will be able to increase its annual dividend in future years and be able to occasionally pay more �special dividends� � and that�s likely why the stock rose so much.

Why should I care?

The bigger picture: Lloyds is trying to cement itself as a classic �high dividend stock.� That sort of stock is meant to pay shareholders a safe, steady and relatively high dividend. Some investors buy them for the regular income they provide and because they are typically viewed as a safe investment compared to other stocks.

For you personally: The bailout of Lloyds has gone a lot better than the bailout of Royal Bank of Scotland (RBS). The UK government has almost broken even on bailing out Lloyds. But it still owns 73% of RBS and is down more than �20 billion on the bailout at today�s stock price (that�s your tax money at work, if you live in the UK!). On the positive side, the UK banking sector didn�t collapse � which is almost certainly a good thing.