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Banking giant HSBC (LSE: HSBA) has been coining it in over the past few years. But what about shareholders? Below I explain what someone who invested £5,000 in HSBC shares at the turn of 2025 would now be sitting on.
36% price gain in under 12 months
Since the beginning of 2025, the HSBC share price has moved up by 36%.
So £5,000 invested back then would now be worth around £6,800, less than 12 months later.
That is the sort of return I would gladly welcome as an investor!
Still, it is not as strong a performance as some rivals have managed in the same period. The Barclays share price, for example, has jumped 65% so far this year.
In my calculation, I presume that £5,000 invested would mean £5,000 spent on HSBC shares. In reality, of course, commissions and other dealing fees can nibble away at the amount invested.
So a savvy investor compares their options when it comes to choosing a share dealing account, Stocks and Shares ISA or share dealing app.
Massive dividend payer
Capital gains are not the only way an investor in HSBC shares back in January could have benefitted financially since then.
HSBC pays out more in dividends than any other company on the London market. In the first half of this year alone, it paid out more than $8bn in shareholder dividends.
The company pays dividends each quarter. There is one due later this month, so an investor who bought HSBC shares in January would already have received three payments to date.
Currently, the HSBC dividend yield is around 4.6%. But bear in mind the share price rise this year. That means an investor back then would be receiving a yield of around 6.3%.
In a year, on £5,000, that would mean passive income of around £315.
With three dividends paid so far this year, then, that £5,000 investment would have earned roughly £236 so far in dividends.
There could be many more to come if the shareholder hangs on to the shares, though of course dividends are never guaranteed to last at any company.
Should I buy?
Clearly, HSBC shares have done well this year. Even after the price rise, the share’s yield is well above the FTSE 100 average.
With its strong brand, leading position in the Hong Kong banking market, global reach and proven business model, I think HSBC could continue to perform well as a business over the long term.
However, after a 166% share price rise in five years, I do not now find the price attractive enough for me to want to invest.
I see a number of risks that could eat into earnings in coming years. A weak economic outlook in some of the bank’s core markets, such as the UK, is one.
Another is the risk of higher defaults on commercial loans: already in the US market there are warning signals in some parts of the commercial lending markets that loan defaults could be set to rise.
So for now, I will not be buying HSBC shares for my portfolio.
