HSBC Holdings PLC's Dividend Analysis
Unlocking the Dividend Potential of HSBC Holdings PLC
HSBC Holdings PLC (NYSE:HSBC) recently announced a dividend of $1.55 per share, payable on 2024-04-25, with the ex-dividend date set for 2024-03-07. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into HSBC Holdings PLC's dividend performance and assess its sustainability.
What Does HSBC Holdings PLC Do?
This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
How to calculate the intrinsic value of a stock?
Established in 1865 in Hong Kong, London-based HSBC is one of the largest banks in the world, with assets of USD 3 trillion and 40 million customers worldwide. It operates across 64 countries with around 220,000 full-time staff. Key regions include Asia, Europe, the Middle East and North Africa, and North America. The United Kingdom and Hong Kong are the two largest markets for the bank. The bank offers retail, commercial and institutional banking, global banking and markets, wealth management, and private banking.
A Glimpse at HSBC Holdings PLC's Dividend History
HSBC Holdings PLC has maintained a consistent dividend payment record since 2021, with dividends currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down HSBC Holdings PLC's Dividend Yield and Growth
As of today, HSBC Holdings PLC currently has a 12-month trailing dividend yield of 3.85% and a 12-month forward dividend yield of 7.82%. This suggests an expectation of increased dividend payments over the next 12 months. Based on HSBC Holdings PLC's dividend yield and five-year growth rate, the 5-year yield on cost of HSBC Holdings PLC stock as of today is approximately 3.85%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-12-31, HSBC Holdings PLC's dividend payout ratio is 0.41.
HSBC Holdings PLC's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks HSBC Holdings PLC's profitability 5 out of 10 as of 2023-12-31, suggesting fair profitability. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. HSBC Holdings PLC's growth rank of 5 out of 10 suggests that the company has a fair growth outlook. Revenue is the lifeblood of any company, and HSBC Holdings PLC's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. HSBC Holdings PLC's revenue has increased by approximately 3.00% per year on average, a rate that underperforms than approximately 71.37% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, HSBC Holdings PLC's earnings increased by approximately 60.50% per year on average, a rate that underperforms than approximately 5.55% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 17.20%, which underperforms than approximately 24.05% of global competitors.
Next Steps
Considering HSBC Holdings PLC's dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics, investors can approach the stock with a balanced view. The consistent dividend history and a reasonable payout ratio provide some assurance, while the growth metrics offer a cautious optimism for the future. While HSBC Holdings PLC may not be outperforming all global competitors, its established market presence and financial health suggest that it could remain a stable dividend-paying investment. As value investors consider the long-term income potential, HSBC Holdings PLC's dividends could be a component of a diversified portfolio strategy. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
