There’s a flurry of FTSE 100 dividend shares updating the market next week. Here I look at two big-yielders set to make the headlines.
Banking giant HSBC (LSE: HSBA) is slated to unveil full-year results on Tuesday, February 19. It’s a stock that will be keenly watched as concerns over slowing emerging markets in Asia, territories responsible for the bulk of the firm’s profits, grow.
The London business certainly impressed last time out and declared in late October that profits in its far-flung territories continued to grow by double-digit percentages as lending to both private and commercial customers kept on surging.
It will be also worth looking out to see if the Footsie firm will be setting aside any more cash for more PPI-related claims, given the uptick in provisions some other banks have witnessed in recent months (HSBC has already incurred costs of almost three-and-a-half-billion pounds owing to the mis-selling scandal). City analysts predict a 3% earnings rise at HSBC in 2019 and this leaves it dealing on a dirt-cheap forward P/E ratio of 11.4 times. That’s a reading that could spur some healthy share price advances if next week’s financials do impress. Now could be a shrewd time to pile into the blue-chip bank and its stunning 6% dividend yields.
Owing to the ongoing fears that Brexit is having on the domestic economy, though, it’s likely that Barclays (LSE: BARC) will command broader media attention when it unpackages its own financials for 2018 on Thursday, February 21.
With Britain’s planned European Union withdrawal date of March 29 drawing ever closer, and the possibility of a cataclysmic no-deal exit becoming ever larger, it’s no surprise to see Barclays’s share price edging lower again in recent weeks. And additional losses could transpire following next week’s release.
Indeed, the risks to the FTSE 100’s UK-focussed banks were laid bare by Royal Bank of Scotland chief executive Ross McEwan on Friday when he complained that “political uncertainty around Brexit has gone on far too long” and that “our corporate clients are pausing before making financial decisions [which] is damaging the UK economy and will affect our income performance.”
Barclays reported that third-quarter revenues had declined when it last updated investors, and I wouldn’t be surprised to see that further slippage has occurred in the subsequent months. What’s more, like HSBC, it will be interesting to see if the bank is forced to stash away more capital to cover the PPI scandal, following the extra £400m it set aside during the first quarter of 2018.
Now, City analysts expect Barclays will record a 4% profits rise in 2019, a figure that leaves it dealing on a prospective P/E multiple of just 7.1 times. However, neither the firm’s dirt-cheap valuation nor its tasty 5.1% dividend yield aren’t enough to tempt me in, given the high chances of severe forecast downgrades, possibly as soon as last year’s results come out in the coming days. It’s a share that investors need to avoid like the plague, in my opinion.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays and HSBC Holdings. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.