Case Study Of HSBC Holding Plc (0005. HK)

2016 Words 9 Pages
Register to read the introduction… However, in 2008 and 2009, they cut down the shareholder payouts substantially due to the financial crisis which resulted in huge earning decline and the regulatory uncertainty surrounding capital requirements.

The actual payout is consistent with such policy, as in majority of the years, the dividend payout ratio is within the range of 40%-60% with a growth of about 10%, even when the profits dropped in 2001 and 2012. In 2008 and 2009, HSBC cut down the dividend payout but once it adapted to the new situation, the dividend payout grew at around 10% again.

3) Factors associated with the company’s dividend payout over time: 1. Economic environment. As Hong Kong is the financial center, banks can gain benefits from this location and obtain good growth opportunity. However, unstable economic condition will result in volatile profit generated by the company and if the reduction of earnings is permanent, the dividend payout will be
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Management team’s forecast of future earnings and cash inflow. When the company was newly born, the board believed as most of their projects were just introduced into the market, their ability to generated profits and cash flow was limited and thus, better not made dividend payment. As time passed by, the earnings grew stably and the board thought this trend would last for a long time. As a result, they began to payout dividend and eventually at a constant rate.

Cheung Kong (Holdings) Limited (0001.HK)

Cheung Kong (Holdings) Limited engages in real estate property investment and development activities primarily in Hong Kong. It was found in 1950 and listed in 1972 in Hong Kong.

1) Dividend payout

| DPS | DPS Growth | EPS | EPS Growth | Payout Ratio | 1989 | 0.38 | 31.03% | 1.26 | 32.63% | 30.16% | 1990 | 0.48 | 26.32% | 1.48 | 17.46% | 32.43% | 1991 | 0.68 | 41.67% | 2.41 | 62.84% | 28.22% | 1992 | 0.8 | 17.65% | 2.83 | 17.43% | 28.27% | 1993 | 1 | 25.00% | 4.45 | 57.24% | 22.47% | 1994 | 1.1 | 10.00% | 4.57 | 2.70% | 24.07% | 1995 | 1.2 | 9.09% | 5.15 | 12.69% | 23.30% | 1996 | 1.38 | 15.00% | 6.15 | 19.42% | 22.44%

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