Tuesday tips round-up: HSBC, Hiscox

HSBC's latest full-year results, with net profits at 18bn dollars, is evidence that the lender has plenty of scope left for dividends. That comes at a time when other banks cannot offer their shareholders such certainty. More importantly, following the completion of the Vodafone/Verizon deal last week, 10bn pounds of investors' funds will shortly be looking for a home. Most of those, having originated within the telecommunications sector, will be looking for another high-yielding destination. The Asia-focused bank last year paid out well over half of its earnings as dividends and, given its solid capital position, it should be able to continue to do so. In fact, its current year pay-out may be on track to hit 5.1 per cent. Unfortunately, that comes hand-in-hand with the risk of a falling share price. In that regard, during the fourth quarter profits in Hong Kong and in the rest of Asia decreased considerably. Hence, those with Vodafone/Verizon cash in their pockets may decide to search for a less volatile home, says The Financial Times' Lex column.Lloyd's of London insurer Hiscox has shown a remarkable knack for navigating through what have been difficult years for the industry. It also has defensive qualities and is willing to return cash to shareholders. The company has been rewarded for this by investors, with its shares trading at a sizeable premium to net assets of 402.2p a share. The latest full-year results revealed another fall in the combined ratio, hence the announcement of a special dividend for a second consecutive year. Nonetheless, and as Hiscox made clear, there can be no guarantee that its recent good run will continue. For example, the main positive from last year's results was the positive impact of the benign hurricane season Stateside. As well, like so many of its rivals, the company is finding it difficult to obtain a decent return from reinvesting customers' premiums. In a more positive vein, its US operations seem to be on the cusp of turning the corner and the firm believes it can double the size of its business through organic means. Hence, the stock's "premium looks deserved, even if further outperformance may be limited," writes The Times' Tempus.Please note: Digital Look provides a round-up of news, tips and information that is impacting share prices and the market. Digital Look cannot take any responsibility for information provided by third parties. This is for your general information only as not intended to be relied upon by users in making an investment decision or any other decision. Please obtain a copy of the relevant publication and carry out your own research before considering acting on any of this information.AB