[pinko]

Forgive my ignorance, but Reuters HSBC Holdings PLC (0005.HK) Stock Quote | Stocks | Reuters.com gives the dividend of HSBC at 7.01, and the yield at 5.95.

I guess that the dividend is HK$ per share, and that 7.01 is the dividend paid by HSBC last year? So, what guarantees are there that they will pay the same dividend this year? I believe that they paid much less a few years ago, and that with the current financial turmoils, they might pay much less this year?

On the other hand, the yield of 5.95% seems very high, compared to the other banks.

Any thoughts? I believe some of you think it's a very good investment...

[pinko]

I mean, if you just look at past dividends to calculate yields, then UBS UBS AG (UBSN.VX) Stock Quote | Stocks | Reuters.com has a yield of 9.55%.

[PDLM]

HSBC has a very stable record of dividend yield (yes, HK$7.01 last year). Despite the turmoil in the markets its first interim dividend for this fiscal year (to be paid on Wednesday) was higher than the corresponding dividend last year (as were its profits). I have a fair chunk of money in HSBC shares (at an average buy price of about HK$120) and I am comfortable to leave that money there for the medium- to long-term for the dividend yield and, I expect, a certain amount of capital appreciation.

I haven't really studied UPS, but a quick look shows that it is losing money, so its dividend yield must be under threat (dividends are supposed to be the shareholders' share of the profits: no profits = no dividends). HSBC's profit continues to grow steadily even after the (relatively minor) writeoffs it has had to take on the subprime mess.

[lionrock88]

Originally Posted by PDLM

HSBC has a very stable record of dividend yield (yes, HK$7.01 last year). Despite the turmoil in the markets its first interim dividend for this fiscal year (to be paid on Wednesday) was higher than the corresponding dividend last year (as were its profits). I have a fair chunk of money in HSBC shares (at an average buy price of about HK$120) and I am comfortable to leave that money there for the medium- to long-term for the dividend yield and, I expect, a certain amount of capital appreciation.

I haven't really studied UPS, but a quick look shows that it is losing money, so its dividend yield must be under threat (dividends are supposed to be the shareholders' share of the profits: no profits = no dividends). HSBC's profit continues to grow steadily even after the (relatively minor) writeoffs it has had to take on the subprime mess.

PDLM, what would you say is a good price to get into HSBC? Is the current price (118) good or do you think it may go down further?

[KnowItAll]

UBS has severe exposure right now from what people have been telling me over the last few months. Not sure how well they're at this very moment.

Admittedly, their banks are not doing as well either.

[er2]

is the bank that suffered more than any other european bank from the US subprime crisis. Apparently they got into the market long after everyone else, and stayed way too long too. I've forgotten most of what I read last year on the case, but I remember that Ospel (who was UBS' sort-of-CEO) gave the lousiest performance that Switzerland has ever seen. Was a great lesson in wishful thinking. No other European bank had write-offs that came close to those of UBS.

A second problem is that UBS is under high pressure from US authorities to reveal the identity of those they helped to evade US taxation. Some UBS managers are not permitted to leave the US anymore, and UBS senior staff is currently strongly advised not to travel to or via US territory. Not a great outlook either. Imho, their great dividend-to-share-price ratio is just a result of the lousy share price

[PDLM]

Originally Posted by lionrock88

PDLM, what would you say is a good price to get into HSBC? Is the current price (118) good or do you think it may go down further?

I think $118 is a good price. Whether a better price will be available in the near term I really don't know - I've given up trying to predict the short term behaviour of the markets these days - they really seem to be somewhat detached from reality a lot of the time.

I have a high degree of confidence that HSBC's share price will not be lower than $118 in, say, 5 years time.