Buy HSBC Holdings plc (HSBA) for the Best Banking Yield

LONDON – Remember the good old days when investors held banking shares for their safe dividend income? The financial crash shattered that. More recently, banking stocks have been a recovery play for those investors brave enough to bet that the eurozone crisis wouldn’t blow up in their faces. It’s been a remarkably successful bet.

HSBC Holdings plc

But if you’re hankering for a safer play on the banking sector and yearn for those reliable dividends, it’s worth having a look at HSBC Holdings plc (LON:HSBA). After recent broker upgrades, its shares are on a prospective yield of 5%, with a 4.2% historic yield in the bag. That’s well ahead of Standard Chartered and Barclays PLC (ADR) (NYSE:BCS), the other two dividend-paying banks. And HSBC Holdings plc (LON:HSBA) surely has the safest dividend in the sector.

Safety in numbers
It’s not just that HSBC Holdings plc (LON:HSBA) is the second largest company on the FTSE 100, with a market cap roughly equal to the other four banks put together. HSBC’s global footprint underpins its safety. With over 6,000 offices in 80 countries, its worldwide reach provides a strong competitive advantage to capture international trade flows and service multinational corporations.

Over 100 million retail and three million corporate customers give HSBC Holdings plc (LON:HSBA)’s brand defensive qualities. Each year, U.S.-based Davis Brand Capital names its top 25 global brand leaders. In a list dominated by titans such as Apple Inc. (NASDAQ:AAPL), The Procter & Gamble Company (NYSE:PG), and The Coca-Cola Company (NYSE:KO), HSBC is just one of a handful of non-U.S. corporations.

Diversification
That global spread imparts geographic diversification. Risk assets are broadly spread across Europe, Asia Pacific and the Americas. Earnings are also dispersed, though more skewed than assets and more exposed to China. Asia Pacific contributed 65% of total pre-tax profits last quarter, with 25% coming from Hong Kong alone.

HSBC Holdings plc (LON:HSBA)’s is mostly a sober, traditional sort of banking. Just over a third of profits come from its Global Banking and Markets division, and not all of that is investment banking.

A healthy 12.7% core tier one ratio also makes it one of the best capitalized banks. After the disastrous acquisition of U.S. sub-prime lender Household, a chastened management team is focusing on shareholder returns. Emerging markets, especially Latin America and Asia, should provide growth.

Yield
With HSBC Holdings plc (LON:HSBA)‘s shares trading at 1.1 times net assets, it looks a good time to lock in that 5% yield.

The article Buy HSBC Holdings for the Best Banking Yield originally appeared on Fool.com and is written by Tony Reading.

Tony owns shares in HSBC, Standard Chartered and Apple but no other shares mentioned in this article. The Motley Fool recommends Apple, Coca-Cola, and Procter & Gamble. The Motley Fool owns shares of Apple.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Dividend Stock Alert - Billionaire Robbins' Top Dividend Idea With 70% Upside Potential

Get Paid 3.5% Per Year While Waiting For The Stock Appreciate 70%

Larry Robbins' Glenview Capital Opportunity Fund returned 101.7% in 2013 and Robbins personally made $750 million. The same fund returned 25.3% in 2014. In this FREE REPORT we will share Robbins' top dividend idea that yields 3.5% and has been increasing its dividends for 39 consecutive years. Robbins thinks the stock has the potential to appreciate 70%.

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Click here to Read Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 74 percentage points in 2.5 years. Our beta is only 1.2 (download a FREE newsletter and see the details inside)

Lists

Best Selling Magazines in the World

Shortest People in History

The Most Celebrated Holidays in the World

Most Expensive Handbag Brands in the World

Top Selling Comic Book Issues of this Century

The Most Powerful Women in Politics

Best Paid DJs

Most Rebellious Female Artists

Best Paid TV Actresses of 2014

Best Paid Actors of 2014

Most Expensive Horses in the World

Tallest People Ever

Most Encouraging Feminist Celebrities

Best Paid Supermodels of 2014

Top 10 Suburbs for Retirement in 2015

10 Wealthiest Cities in America

Top 10 TED Talks for Entrepreneurs

Best TED Talks on Education

25 Most Dangerous Places to Live in America

Top 10 Ski Resorts in the United States – 2014 List

Top 10 Most Remote Places in the World

Most Visited Museums in the United States

Wealthiest Photographers in the World

Most Famous Gay Athletes

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!