Barclays vs HSBC Which Should You Buy?

Barclays and HSBC are two of the largest and most well-known banks in the United Kingdom, with a significant presence in the global financial market. Both companies have been in operation for over a century and have a long history of serving customers in various financial services. When comparing their stocks, investors often look at factors such as revenue, profits, market share, and growth potential. Understanding the differences between Barclays and HSBC stocks can help investors make informed decisions on where to allocate their capital.

Barclays or HSBC?

When comparing Barclays and HSBC, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Barclays and HSBC.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Barclays has a dividend yield of 4.06%, while HSBC has a dividend yield of 10.19%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Barclays reports a 5-year dividend growth of 9.63% year and a payout ratio of 0.00%. On the other hand, HSBC reports a 5-year dividend growth of 0.62% year and a payout ratio of 0.00%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Barclays P/E ratio at 34.87 and HSBC's P/E ratio at 6.91. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Barclays P/B ratio is 2.46 while HSBC's P/B ratio is 0.85.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Barclays has seen a 5-year revenue growth of -0.33%, while HSBC's is 0.01%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Barclays's ROE at 8.15% and HSBC's ROE at 12.87%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $12.91 for Barclays and $44.92 for HSBC. Over the past year, Barclays's prices ranged from $6.91 to $13.57, with a yearly change of 96.38%. HSBC's prices fluctuated between $36.93 and $47.56, with a yearly change of 28.78%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.