NEW YORK ( TheStreet) -- HSBC Holdings PLC ( HBC) looks like quite a dividend play for investors, and BernsteinResearch also sees 17% upside for the company's shares. American Depositary Shares of HSBC closed at $57.00 Tuesday, returning 7% this year, following a 48% return during 2012, when the company made a major move to pull out of the U.S. market, completing the sale of roughly 200 branches in upstate New York to First Niagara Financial Group ( FNFG) and other banks, and also selling its entire U.S. credit card portfolio to Capital One Financial ( COF). Remaining U.S. loans have been placed in run-off and HSBC's impaired North American assets fell by 26% during the first quarter from the fourth quarter, to $447 million as of March 31. "This raises the potential for early repatriation of the excess capital stuck in the U.S.," Bernstein analyst Chirantan Barua wrote in a report to clients on Tuesday. Barua added that "the bank can increase its dividend at least 30% this year given the fact that it has already met its high capital requirements and this would prove to be a strong catalyst for the stock."
That would be quite a significant event for investors, considering that HSBC's shares already have a dividend yield of slightly over 4%. HSBC is headquartered in London. The company had $2.7 trillion in total assets as of March 31 and on Tuesday reported first-quarter earnings of $8.434 billion, increasing from $4.322 billion during the first quarter of 2012. According to Barua, the first-quarter profit before taxes and one-time items was "9% ahead of consensus expectations. The beat against consensus was primarily driven by 38% lower than expected impairments and 4% lower than expected operating expenses." HSBC's first-quarter return on average equity was a solid 14.9%, improving from 6.4% a year earlier.
"Across all lines, we see these results as an endorsement of the strength of the franchise and its ability to generate earnings even in a sluggish macro environment," Barua wrote, adding "We see HSBC as the best Counterparty in global banking today with further upside potential as growth comes back and rates rise."