HSBC: Buy European Dividend Stocks As Valuations And Bond Yields Decrease

Yield is set to outperform quality and growth according to HSBC’s European equity research team. In a note issued to equity research clients on Wednesday and reviewed by ValueWalk, HSBC suggests that European high yield equities will benefit from falling bond yields over the next few months.

According to HSBC’s fixed income research team, Bund yields will fall to 0.2% next year, which will increase the demand for high yield equities among investors. Other styles may also outperform as bond yields fall, but HSBC prefers yield as valuation risks are lower. The price to book relative of high yield sectors is at an 18% discount to its 20- year average. This is in contrast to growth and...