The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
We would all like to see the end of year HSBC share price to be £7 (or more), which would represent a 30% increase since the end of last year, but even £6-50 would be over 20% and £6-70 would be almost 25%. For those (of us) who have taken scrip dividends earlier in the year, especially in April and July, the returns are very good even at current levels. I assume the new scrip dividend will be 624.20p per share, but with a favourable exchange rate (to be announced shortly) that should be less than $7-70, which is lower in dollar terms - the basis for allocation - than the scrip rice last December when the Sterling price per share was 512.7p per share!!! Surely Goldman Sachs are on target - over £1 billion has already been spent (excluding dealing costs) buying back just under 180 million shares, with two full months of dealing left before the year end. I would much rather see a steady increase in the share price over the next few years than a sudden surge which fizzles out early next year. It would also be good to see long term shareholder loyalty rewarded - other than the opportunity to take scrip dividends. I have read a lot in these posts about a "Special Dividend", and although some companies do indeed pay special dividends direct to shareholders, I have seen no mention of that from HSBC management - if a substantial sum of money is released form the USA, the most likely course of action would be a further buyback. We all eagerly await the 3rd quarter update, and more importantly, the analysts / market reaction, then I suppose all will go quiet until the year-end results are announced in February, and a final (sorry, fourth interim) dividend is declared. I see the shares will go ex-dividend very quickly following that announcement, which is very interesting, and I don't recall seeing such timings during the fifteen years I have been a shareholder. By the way, if you look at historical prices on most sites (including HSBC's), they have been "adjusted" (downwards) to take into account the Rights Issue which took place in 2009. Great returns on those shares,- and by the end of next year the dividends paid since then should have more than covered the cost buying of those (heavily) discounted shares - : ) I look forward to the sterling scrip dividend price confirmation and exchange rate / dollar price announcement. Steve
Hi SUF, I have enjoyed reading your posts, and know how important it is to have a sense of humour - especially when the chips are down - or the Bingo numbers don't get called! It has certainly been a roller coaster of a ride with these HSBC shares over the last 15 years, but things appear to be looking up now - for the time being at least. Although the dividend was cut dramatically in 2009, HSBC (unlike many other banks) have continued to pay dividends every quarter since then, and the dividend has grown slowly each year. The trouble is now with almost 20 billion shares in circulation, a substantial amount is required to fund any dividends - if a special dividend had been paid instead of the buyback, it would have equated to about 12.5c per share. The buyback option seems good to me, with possibly more to come sometime next year. Hope Buster is still chirpy, Steve
Hi Tonyj, I have certainly done the maths in respect of my/our own holding, and know the "break even" price points (some way to go yet) to ease off / take a break from acquiring more shares by means of scrip dividends. I expect lots of people have their own targets in respect of quantity and/or value of shares held, and when to buy/sell - for many different reasons. We are not planning to sell our shares, especially if dividends are maintained at (or close to) current levels, for the next few years. I have never been in the business of predicting values, but I do keep a close eye on any significant developments which may well affect prices - be it the state of our own or other countries economies, exchange rates, interest rates, the political scene, rules and regulations, criminal activity (e.g. fraud, money-laundering), natural disasters, wars etc. Time will tell where these shares end up - it will be particularly interesting to see what happens after the calendar year end - prior to the annual results, which are scheduled to be announced on 21st February 2017. Steve
Good afternoon all, Having followed these posts for several months (since the BREXIT referendum), with interest (and sometimes amusement), I thought it was time to register and offer my own contribution. In the late 1980's my wife and I befriended an elderly gentleman who was using taxis to/from the church we were attending. When we discovered where he lived, we were able to offer him transport especially as it was only a small detour for us. We became good friends and would share meals, outings etc., then shortly after he passed away early this century,/millennium, the solicitor acting for his estate sent us a letter showing an extract from his will, that we had been left a specific number of HSBC shares, which were allocated to us at the closing price (£8.8375) on the day of his decease. It took a few months for the estate to be settled, and we had the option to sell some/all of the shares, and did sell a few at just over £10 each. Rightly or wrongly, we have held on to the remainder of the shares, taking a mixture of cash and scrip dividends - depending on price / exchange rate. For those who think the dividend is now really good (and we are certainly not complaining), in 2007 the total dividend was 90c per share (3 x 17c + 39c) but the exchange rate was hovering around 2 dollars to the pound! Then in 2009 came the Rights Issue , when all existing shareholders were offered the opportunity to buy five new shares at £2-54 ($3-61) for every 12 currently held, which resulted in a significant dilution - there were about 12 billion shares in circulation prior to the rights issue and about 17 billion immediately afterwards. We took full advantage of this, and have enjoyed receiving dividends ever since. It is therefore unlikely that the share price (or dividend) will revert to those earlier levels, but this year sees a significant positive trend. For those who expect/hope for a sudden surge in share price, just check the detail of the resolution for buyback - the maximum share price must not exceed 105% of the average for the previous five days, which may explain why none were purchased on 5th and 8th of August. The buyback seems a good idea, but with scrip dividends still available the number of shares in circulation may well still increase. For us the best option is often to take a mixture of shares and cash for each dividend - that we we get the "best of both worlds". It will be interesting to see what happens during the next few months. Steve