BUZZ-Lloyds: more news on dividends likely to drive income fund buying

** Details on Lloyds' dividend expected to spur further buying from income funds underweight the stock

** Reuters reported on July 21 the bank is set to unveil dividend plans at its results on Friday, after already announcing a 0.75p divi for FY 2014

** Average analyst has stock on a FY15 yield of 3.1 pct, rising to 4.8 pct in 2016 and 5.9 pct in 2017, according to Thomson Reuters (Dusseldorf: TOC.DU - news) data - yields that income funds "cannot afford not to own", according to a trader at a large investment bank

** Trader points to performance of ING - up 38 pct since announcing reinstatement of divi in Feb - as an indicator of the power of a positive announcement

** Lloyds set to become one of the UK's biggest dividend payers on the FTSE 100 in next few years, according to hedge fund Toscafund

** Income funds already building positions in anticipation of rapid dividend growth

** UK institutions still underweight the stock despite divi prospects

** Screens well for valuations on an intrinsic and relative basis, according to Starmine

** Fwd P/E of 10.4x cheapest valuation of the UK banks. Chart: http://link.reuters.com/xun35w

(RM (LSE: RM.L - news) : alasdair.pal.thomsonreuters.com@reuters.net)