Hate Bankers? You’ll Still Love To Invest In HSBC Holdings Plc

While public opinion may be against the bankers, investor sentiment should be with HSBC Holdings plc (LON: HSBA).

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

It seems as though whenever the government finds itself in a tight spot, it is able to shift the blame for economic woes onto the banking sector. Since public opinion is very much against the ‘excesses of the city’ and the ‘immoral behaviour of bankers’, this has proven a relatively easy game for the government to play, and win.

Of course, with the general election now on the horizon and the government still hopeful of shifting at least one of the part-nationalised banks from its books, ‘banker bashing’ may become less prevalent during the next two years.

Indeed, whatever your view on the sector (and the people who work in it), you know as well as I do that a golden rule of investing is to listen to your head and not your heart. With this in mind, I think that HSBC Holdings (LSE: HSBA) (NYSE.HBC.US) should be high-up on your list of priority stocks.

Certainly, HSBC is not ‘whiter than white’. A $1.9bn fine for unintentionally laundering the proceeds of Mexican drug money, as well as being involved in the PPI scandal and ‘casino banking’ scene mean it may be a company you love to hate. However, from an investment perspective, it really does stack up.

Shares currently trade on a price-to-earnings (P/E) ratio of 14.8, which compares favourably to the financials sector, which has a P/E of 18.2. Furthermore, earnings per share are forecast to grow at around 10% per annum over the next two years, figures which few FTSE 100 companies are able to match. In addition, shares currently yield an impressive 4% from a dividend which is well covered and has the potential to grow in line with earnings.

Of course, the banking sector remains bruised and battered from a truly awful five years. The public, politicians and business community remain steadfast in their hatred of the sector and its employees.

However, brisk earnings growth and an impressive yield, plus the potential for less bad news flow in anticipation of a privatisation of Lloyds (LSE: LLOY) and/or HSBC, Lloyds and RBS (LSE: RBS) mean than HSBC could offer a boon to the investor who listens to his head and not his heart.

I own shares in HSBC, Lloyds and RBS and would recommend that if you are looking for alternative opportunities in the FTSE 100, this exclusive wealth report reviews five particularly attractive possibilities.

All five blue chips offer a mix of robust prospects, illustrious histories and dependable dividends, and have just been declared by The Motley Fool as “5 Shares You Can Retire On“.

Simply click here for the report — it’s completely free!

 > Peter owns shares in HSBC, Lloyds and RBS.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

More on Investing Articles

Mature black couple enjoying shopping together in UK high street
Investing Articles

How much must I invest in Tesco shares to earn income of £1,000 a year in 2024?

Tesco shares have given investors a winning combination of dividend income and share price growth lately. Should I buy them?

Read more »

Portrait of elderly man wearing white denim shirt and glasses looking up with hand on chin. Thoughtful senior entrepreneur, studio shot against grey background.
Investing Articles

Should I sell underperforming Fundsmith Equity or can Terry Smith beat the world again?

Terry Smith's investment vehicle Fundsmith Equity is heading for a second year of underperformance. Is it time to bail out?

Read more »

Shot of a young Black woman doing some paperwork in a modern office
Investing Articles

2 quality growth stocks I’m looking to buy in December

Stephen Wright thinks two growth stocks could be great investments for 2024. One is a FTSE 100 conglomerate, the other…

Read more »

Young Caucasian man making doubtful face at camera
Investing Articles

Does today’s beaten down Scottish Mortgage share price make it a no-brainer buy?

The crashing Scottish Mortgage share price has marred many a portfolio. Now there's talk of a recovery. Am I in?

Read more »

Young Caucasian woman with pink her studying from her laptop screen
Investing Articles

If I could only buy 1 more FTSE income stock in December, I’d grab this ultra-high-yielder

I think I can afford to buy one more FTSE 100 income stock before the end of the year. My…

Read more »

Abstract 3d arrows with rocket
Investing Articles

I think these are my best growth shares to buy with £1,000

Jon Smith talks through some shares to buy that he likes for next year, with a particular focus on retail…

Read more »

Young Asian man drinking coffee at home and looking at his phone
Investing Articles

2 terrific cheap shares I’d snap up before it’s too late!

Our writer wants to capitalise on cheap shares now before any potential market rally and identifies a couple of stocks…

Read more »

Mindful young woman breathing out with closed eyes, calming down in stressful situation, working on computer in modern kitchen.
Investing Articles

While the US stock market booms, the FTSE 100 lags behind. Or does it?

In November, global stock markets had their best month in over three years. Meanwhile, the UK's Footsie keeps falling further…

Read more »