FTSE dividend stocks play a meaningful role in my investing strategy. They enable my portfolio to generate income, which I can choose to either spend or reinvest (acquire more dividend-paying shares).

In October, I’m looking forward to investing more money in HSBC (LSE: HSBA). Here’s why.

A high-yield dividend stock

The global banking giant is offering a very attractive dividend these days. It has a yield of 7%, which is around double the FTSE 100 average. While no dividend is assured, the prospective payout looks well-covered.

According to news sources, HSBC plans to sell its South Africa assets. This follows the lender’s move out of Argentina, France, and Canada. The reason is that it wants to focus on Southeast Asia and China.

This strategy makes sense, given that the region is home to more than half the world’s population and some of its fastest-growing economies. These include India, Vietnam, and the Philippines.

By 2040, Asia is projected to drive approximately 60% of global economic growth and contribute 90% of the 2.4bn new members joining the global middle class. HSBC is laser-focused on expanding its wealth management business to capitalise on the region’s growing demand for financial services.

China is a double-edged sword

In the present though, China is still a bit of a risk. The world’s second-largest economy has been suffering growing pains, not helped by a property crisis. Sluggish economic activity obviously isn’t ideal for HSBC.

Meanwhile, youth unemployment remains very high. In fact, I’ve been reading about young Chinese graduates who are ‘retiring’ to the countryside, fed up with the situation. Apparently some of them are trying to become social media influencers rather than work in lower-paid jobs.

To boost economic growth, Beijing has just approved a huge stimulus package. We don’t know whether that’ll be enough, but investors have turned bullish anyway and Chinese stocks have been surging.

Lower rates ahoy

Another challenge is falling interest rates, which threatens the lender’s net interest margin. In Hong Kong, its biggest market, the bank recently trimmed its prime lending rate for the first time in nearly five years.

To mitigate the impact, HSBC has been cutting costs and employing a structural hedge (a financial strategy used to manage exposure to interest rate fluctuations). Despite these efforts, the situation still adds risk, in my opinion.

A bargain-basement stock

Yet I think the stock is undervalued relative to its growth potential. It’s trading on a price-to-earnings (P/E) ratio of just 7.8, well below the FTSE 100 average of 15.

In July, the bank also announced it was buying back another $3bn worth of its own shares, following a $5bn buyback earlier this year. These programmes can enhance shareholder value by improving key metrics like earnings per share (EPS).

Long term, I think the bank’s strategic focus on Asia will pay off. As it points out: “If the 19th century belonged to Europe, and the 20th to the US, the 21st century is all about Asia“.

In summary, HSBC is focused on high-growth economies and banking areas. The stock is trading cheaply and offers a market-beating dividend yield of 7%. As soon as I have the cash, I’ll be snapping up shares.