Lloyds Banking Group will pay a dividend of 0.75p per share to investors, after reporting a rise in underlying profit of 26 percent to £7.8 billion ($12 billion) in 2014.
The dividend, Lloyds' first since 2008, may be small, but it is a significant milestone in the bank's recovery from its disastrous purchase of HBOS in 2008.
"It is the single biggest catalyst that investors were waiting for," according to Chirantan Barua, senior analyst at Bernstein.
The bank's executives will also be better rewarded this year, as Lloyds will pay out a total of £370 million in bonuses for 2014 - despite ongoing reputational issues. These includes share awards worth £7 million for Antonio Horta-Osario, the bank's chief executive.