Here’s why I just loaded up on this FTSE 100 growth and dividend share
The FTSE 100’s a great place to go hunting for bargain shares. Legal & General, Coca-Cola CCH and Aviva are just a few cheap major stocks I hold in my own portfolio. I recently added to it by picking up some low-cost HSBC Holdings (LSE:HSBA) shares as well.
The Asian bank’s been on my radar for some time. And although HSBC’s share price is up 11.2% so far in 2025, it still looks cheap based on a range of metrics. So with some dividend income and tax relief sitting idle in my Self-Invested Personal Pension (SIPP), I figured why not snap up some shares?
Here’s why I’ve decided to take the plunge.
Incredible value
First let’s drill down into why HSBC shares look so cheap today. At 871.3p per share, the bank trades on a forward price-to-earnings (P/E) ratio of 8.8 times.
This is below the average of 11 times for the broader FTSE 100, and a reading of 10.6 times for Lloyds, the UK’s most popular banking stock.
In addition, this year’s dividend yield at HSBC is also far more impressive, at 5.7%. For Lloyds this is 4.5%, and for the wider Footsie, 3.4%.
Past performance is no guarantee of future returns. But given the bank’s record of generating far superior profits to shareholders — and the platform it has to continue outperforming — I think these readings suggest it’s a steal.
Strong returns
| Stock/Index | 10-year average annual return |
|---|---|
| HSBC | 7.8% |
| Lloyds | 1.6% |
| FTSE 100 | 6.3% |
Like the Footsie, HSBC has significant global exposure which explains its healthy returns since 2015. The share price gains and dividends it’s delivered leave those of Lloyds shares in the dust, reflecting the latter’s focus on the low-growth UK market.
But HSBC also outstripped the wider blue-chip index because it’s focused especially closely on fast-growing markets of Asia. Economic hotspots like China, Hong Kong and Singapore have been key profits drivers in recent years. Low product penetration and rapid wealth and population growth in South-East Asia have also supercharged performance (and continue to do so).
Given the strong long-term opportunities, it’s perhaps no surprise that the bank’s pivoting ever more aggressively to these rapidly-growing markets. In the past couple of years it’s sold assets in France, Canada, Germany and Argentina, to name a few. It’s also weighing up the sale of its Australian retail operation, if reports are to be believed.
A long-term share
This strategy comes with risk. Slimming down its geographic footprint means group performance is more vulnerable to localised shocks in Asia. With trade tensions between the US and China simmering, the danger of unwelcome turbulence is especially high right now.
Yet the long-term outlook for Asia’s banking market remains robust, leading me to believe HSBC shares will continue outperforming over the next 10 years. The experts at Statista, for example, think net interest income among traditional banks will rise by $1.2trn over the four years to 2029, to $6.7bn.
Given its improving digital banking proposition, strong brand power, and growing focus on (the especially lucrative) wealth management arena, I believe HSBC could be one of the best shares to consider to capitalise on this opportunity. I plan to hold the bank for years to come.
The post Here’s why I just loaded up on this FTSE 100 growth and dividend share appeared first on The Motley Fool UK.
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HSBC Holdings is an advertising partner of Motley Fool Money. Royston Wild has positions in Aviva Plc, Coca-Cola Hbc Ag, HSBC Holdings, and Legal & General Group Plc. The Motley Fool UK has recommended HSBC Holdings and Lloyds Banking Group Plc. 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.
