Shares in HSBC Holdings (LSE: HSBA) have fallen by 25% over the past 12 months, to 466p, as fears over the bank’s exposure to China continue to cast a cloud. With the country’s finances being pretty impenetrable, the amount of possible bad debt exposure is impossible to work out.

But one upside of a falling share price is that it can boost dividend yields quite nicely, and you can often lock in a nice future cash stream if you buy when shares are cheap. HSBC’s dividend is forecast to yield 7.4% this year, and who wouldn’t want that kind of income?

The risk though, is that the bank won’t meet that forecast, and in HSBC’s case it’s a genuinely big risk — with EPS set to drop 5%, earnings would be covered under 1.3 times, and that doesn’t fill me with confidence. In fact, at results time the company reminded us that its “dividend growth remained dependent upon the long-term overall profitability of the group and delivering further release of less efficiently deployed capital“.

And don’t forget, Barclays has slashed its dividend for this year, in a move that surprised me — I wouldn’t buy HSBC for the dividend right now.

Getting it right

I’m more drawn to the 7.9% forecast for NEXT (LSE: NXT) for this year, having always been impressed by the quality of the company’s management and its buying expertise. While others on the high street, notably Marks & Spencer, struggle to get their product mixes right in the fickle fashion market, NEXT just seems to get it spot on every time.

A warning at full-year results time in March told us that “2016 will be a challenging year with much uncertainty in the global economy“, and though the results showed increases across the board — including a 5.3% rise in the ordinary dividend, in a year in which NEXT also handed back 230p in special dividends — the share price shed 15% on the day, and as I write it’s standing at 5,390p.

But with two more years of EPS rises forecast, continuing NEXT’s growth trend, the forecast dividends should be adequately covered — and the shares, on a P/E of 11.6 based on January 2018 predictions, look good value to me.

Perfect time?

Facilities management and construction company Carillion (LSE: CLLN) suffered a few years of falling earnings during the economic slowdown, but things seem to have levelled-out now. And after a 4% EPS rise recorded last year, we should see a small overall increase in the next two years. And that presents us with what could be an ideal time to buy the shares — priced at 291p they’re on a forward P/E for this year of only 8.5, dropping even lower to 8.1 based on 2017 forecasts.

But the big attraction is Carillion’s dividend. A policy of maintaining high cover has allowed the company’s payouts to keep pace with inflation even when earnings were falling. And there are two years of inflation-beating rises forecast for this year and next — to yield 6.5% in 2016, with cover by earnings of a respectable 1.8 times.

With Carillion waxing about its “robust, high-quality order book and a growing pipeline of contract opportunities” at results time in March, I can see why there’s a buy consensus out there from the City’s analysts.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has recommended Barclays and HSBC Holdings. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.