8.3% dividend yields! A dirt-cheap FTSE 100 stock I'd buy for long …

I’m looking for the best-value dividend stocks to buy for my portfolio before this week’s Stocks and Shares ISA deadline. And I think HSBC Holdings (LSE:HSBA) might be one of the most attractive FTSE 100 bargain stocks to buy right now. Today the blue-chip bank trades on a forward price-to-earnings (P/E) ratio of 5.5 times.

It also trades on a forward price-to-earnings growth (PEG) ratio of 0.1, based on projections that earnings will soar 69% in 2023. Any reading below one indicates that a stock is undervalued. On top of this, HSBC’s share price currently carries a huge 8.3% dividend yield.

But do the risks of investing in the bank make it a FTSE 100 share to avoid?

The risks

Profits at banking businesses like HSBC are in enormous danger as inflationary pressures deflate. Why? Because central banks keep rates higher during periods of significant price rises.

And the higher interest rates are, the more money retail banks make on their lending activities. This week Silvana Tenreyro — who sits on the Bank of England’s rate-setting Monetary Policy Committee — said that the current benchmark rate might “require an earlier and faster reversal” as signs grow that inflation could fall below policy-makers’ targets. Speculation is growing that central banks globally could reduce rates more sharply than expected as inflation tempers.

Their appetite to cut could be strengthened if the global economy struggles for momentum. Higher rates helped HSBC’s net interest margin (NIM) rise more than a quarter of a percent in 2022, to 1.48%. The NIM measures the difference between the interest banks charge borrowers and what they offer to savers.

This in turn pushed revenues 4% higher to £51.7bn. Lower rates pose a threat to HSBC and its peers’ ability to grow profits in the near term, then. But I still believe the potentially explosive benefits of buying the FTSE 100 bank outweigh the risk of sharper-than-expected interest rate rises.

The rewards

More specifically, I think HSBC’s pivot towards Asia could deliver huge long-term returns to investors.

The business is cutting its exposure to slower-growing developed territories as it turbocharges investment in its emerging regions. Its latest move in November saw it sell its Canadian operations for £10.1bn in a move that will give it more financial clout for expansion in Asia. It has already vowed to spend £6bn over the next five years to expand its operations in China, Hong Kong, and Singapore.

Moves to expand its presence in areas like wealth management could prove highly profitable as wealth levels in Asia boom. Financial services giant BBVA reckons the continent will be responsible for 65% of global economic growth by 2027. Despite the problem of rising competition, HSBC could make terrific profits against this backdrop.

It certainly has the financial firepower and the brand strength to make the most of this opportunity.

If I have spare cash to invest I’ll be looking to add HSBC shares to my portfolio.

Tags:

argus-car-hire listed on couponmatrix.ukcote-brasserie listed on couponmatrix.ukfoyles-for-books listed on couponmatrix.ukinderwear listed on couponmatrix.ukliberty listed on couponmatrix.ukwwwordnancesurveycouk-shop listed on couponmatrix.uk
argus-car-hire listed on couponmatrix.ukArgus Car Hire make hiring vehicles in the UK, continental Europe and virtually any other major destination in the world an absolute doddle. By aggregating every hire business of any note onto one, easy-to-use website they can provide you with a car to suit your needs at the lowest price possible with a just a few clicks of your mouse. What's more, you can use the Argus Car Hire discount code to drive prices even lower, enjoying easy, low-cost motoring all over the world.
cote-brasserie listed on couponmatrix.ukTake a peek at the delectable Côte Brasserie menu and you’ll soon be dreaming of the flavours and ambience of Paris. Inspired by Parisian bistros, Côte Brasserie has brought French cuisine and culture to the UK - whether you’re popping into Côte Brasserie Covent Garden or Côte Brasserie Cardiff, you can indulge in fabulous French dishes, set menus, and aperitifs for a very affordable price. Don’t forget to browse our collection of Côte Brasserie discount codes before you book a table, and you could tuck into a fine French spread without busting your budget.
foyles-for-books listed on couponmatrix.ukFoyles for books is a popular online retailer specializing in books and literature. They offer a wide range of titles and genres, making them a great choice for book lovers of all kinds. To get the most out of your Foyles for books shopping experience, be sure to use a Foyles for books discount code and lower the cost of your literature. So what are you waiting for? Start shopping at Foyles for books today! If you're like most people, you love a good deal. And what's better than a discount on something you were going to buy anyway? At Groupon, we understand that saving money is important to our customers. That's why we work hard to find the best Foyles for books discount codes. We know that book lovers are always looking for a good deal, so we make it our mission to find the best promo codes and discounts codes for different books. Whether you're looking for a discount on a new release or a classic, we've got you covered. If you're looking for a great discount on a top-performing book, then look no further than Foyles for books. We offer Foyles for books promo codes for a variety of different books, so you can save money on your next purchase. Whether you're looking for a discount on a new bestseller or a literary classic, we've got you covered. So take a look around and see what we have to offer. Thanks for considering us!
inderwear listed on couponmatrix.ukInderwear is an online retailer specializing in men's underwear, swimwear, and other apparel. They offer a wide variety of products from well-known brands such as Calvin Klein, Adidas, and Nike. Use our Inderwear discount code to enjoy great savings mesh briefs, trunks, boxers and every other kind of undergarment you and your lower half could need. So next time you’re seeking quality, comfortable clothing for your waist, think only of Inderwear. We know that saving money is important to our customers, which is why we work hard to find the best discount codes for Inderwear. If you’d like to show a vested interest in the brand yourself, we’d recommend signing up to the Inderwear newsletter to get exclusive discounts directly from the Inderwear team. Regardless of what you do, Groupon will endeavour to always provide the lowest prices possible on quality underwear. Popular boxer briefs come in a wide assortments of designs and colours thanks to the extensive inventory at Inderwear. These briefs are made from a soft and snug material that will keep you feeling your best all day long. With our Inderwear promo codes, you could potentially secure two sets of briefs for the price of one. You can’t put a value on true comfort but at least you know it comes competitively priced whenever you opt for Inderwear.
liberty listed on couponmatrix.ukDiscover the sumptuous fabrics, designer clothing and elegant homeware offered by Liberty, and add the luxe touch to your space, wardrobe and life. Snap up a Liberty discount code from us to shop all the fashion, beauty and gifts this iconic British department store has to offer and enjoy a guilt-free spree without busting your budget. Established on London’ Regent Street since 1875, when you treat yourself to the high quality wares from Liberty, you can trust in their capable, expert hands.
wwwordnancesurveycouk-shop listed on couponmatrix.ukExplore Great Britain and all it has to offer with an Ordnance Survey map. They cover all of the nation, so you can get out and about with confidence. Don’t stay stuck indoors with no where to go, enjoy the countryside with a map and do it for less with an Ordnance Survey discount code. From paper to digital, however you like to get around, there is a map at Ordnance Survey for you.