"Portrait" of A-share high-dividend assets: outperforming the market for several consecutive years

Recently, the A-share sector with "generous" dividends and high dividend yields has once again attracted attention, and the trend is significantly stronger than that of the broader market in the same period, and continues to be sought after by the market.

In an interview with a reporter from the Securities Times, some experts believe that there are a variety of factors playing a role behind the popularity of high-dividend assets in the A-share market in recent years, including the investment advantages of high-dividend assets themselves, the macroeconomic background, changes in investors' mentality, and the impact of the decline in the yield of benchmark assets.

High-dividend assets that have outperformed the broader market for several consecutive years are favored by A-shares

Since 2024, high-dividend assets in the A-share market have generally achieved positive returns, significantly outperforming the broader market over the same period.

High-dividend assets in the A-share market are generally characterized by high cash dividend yields, stable dividends, and relatively low volatility. In terms of industry distribution, companies in basic industries such as energy account for a relatively high proportion. From the perspective of the nature of enterprises, there are relatively many state-owned enterprises or state-owned holding enterprises.

In fact, from 2021 to 2023, A-share high-dividend assets have significantly outperformed major A-share market indices such as the Shanghai Composite Index and the Shenzhen Component Index for three consecutive years.

As one of the representative indices representing high-dividend assets in the A-share market, the SSE Dividend Index selects 50 securities listed on the Shanghai Stock Exchange with high cash dividend yield, relatively stable dividends, and a certain scale and liquidity as the index sample. According to the data, the Shanghai Composite Dividend Index has risen by 2024.2% year-to-date in 50, while the Shanghai Composite Index has fallen by 3.12% over the same period, with a yield gap of 5.62 percentage points between the two sides. Previously, in 2023, the Shanghai Composite Dividend Index rose by 2.67%, with a yield of 6.37 percentage points exceeding the Shanghai Composite Index and 16.21 percentage points exceeding the Shenzhen Component Index over the same period.

Going back two years, high-dividend assets have also significantly outperformed the broader market. In 2022, the Shanghai Composite Dividend Index fell slightly by 2.42%, while the Shanghai Composite Index fell by 15.13% during the same period, with a yield of 12.7 percentage points higher than that year's Shanghai Composite Index and 23.43 percentage points higher than the Shenzhen Component Index, reflecting better resilience. In 2021, the Shanghai Composite Dividend Index rose by 7.62%, also outpacing the 4.80% increase in the Shanghai Composite Index and the 2.67% increase in the Shenzhen Component Index over the same period.

From the perspective of individual stocks, we can see the sharp rise of high-dividend assets in the above range: among the 50 sample stocks of the Shanghai Dividend Index, 38 stocks will rise in 2023, of which 14 stocks will rise by more than 30%, and stocks such as Hengyuan Coal Power, Lu'an Environmental Energy, Hailan Home, Chinese Media, and Huaibei Mining will rise by more than 40%; if the performance from the beginning of 2021 to the present is counted, about 50% of the above 20 sample stocks have risen, of which nearly 9% of the stocks have risen by more than <>% during the period , <> stocks doubled, far outperforming the broader market in the same period.

A number of factors support the continued strength of high-dividend assets

In recent years, the popularity of high-dividend assets in the A-share market is not only due to their own advantages, but also due to specific environmental impacts.

In an interview with a reporter from the Securities Times, senior market person Gui Haoming believes that the market has recently experienced "low volatility and high yields" (that is, low volatility and high dividend yields) There are several reasons for the popularity of varieties: First, most of the companies corresponding to this kind of varieties are large and medium-sized enterprises controlled by state-owned or state-owned assets, some of them are also basic industry enterprises, some are banking enterprises, and the business of enterprises is relatively stable, and the dividends are also stable, so that the relevant enterprises can bring relatively stable investment return expectations in the medium and long term; second, the stock market trend is weak at this stage, investors are more cautious, and high-dividend varieties are defensive varieties with net assets as support; third, at present, bank interest rates are generally downward, and the dividend yield of some varieties exceeds bank interest rates, and it is not excluded that some investors will see bank interest rates fall, transferred to the investment of "low-volatility and high-yield" stock varieties.

Chen Jianhua, a strategic analyst at Yintai Securities, pointed out in an interview with the Securities Times that since the end of November last year, the performance of the high-dividend sector has been significantly stronger than that of the market as a whole, and there are specific macro background factors behind it. On the one hand, from the perspective of the performance of the real economy, the recovery process is not smooth sailing, the market risk appetite is under pressure, and the allocation of funds is biased towards defense; on the other hand, from the perspective of the capital situation, the external Federal Reserve has released a clear signal of the end of interest rate hikes, and domestic banks have promoted a new round of deposit "interest rate cuts", and the decline in the funding rate has enhanced the value of high-dividend asset allocation. In this context, the market's attention to high-dividend sectors has increased significantly recently.

Looking forward to 2024, Chen Jianhua believes that there are still allocation opportunities in high-dividend sectors, but individual stocks in the sector may diverge. From the perspective of opportunities, as the regulators continue to promote long-term funds into the market, the allocation demand for high-dividend sectors is expected to increase significantly, and at the same time, with the domestic economy gradually bidding farewell to high-speed development, the competition pattern of mature industries is further optimized, and the decline in capital expenditure makes its ability to increase cash dividends enhanced, which will enhance the allocation value of such stocks; 。

Gui Haoming believes that there is a possibility of continuation of the strength of high-dividend assets in the future, in other words, market funds, especially some funds with more cautious investment styles, do not rule out some incremental funds, and may also consider investing in these varieties.

Combined with the investment environment, market sentiment and policy-driven analysis at home and abroad, it is expected that in the first quarter, especially around the Spring Festival in 2023, the probability of high dividend strategy restlessness is still large.

Risks still need to be prevented and controlled

In fact, judging from the historical trend of A-shares, different types of stock assets have different advantages, and they may lead the way for a period of time in different time and space environments, and feng shui takes turns.

Gui Haoming pointed out that in the past, every dividend season, "low volatility and high interest" stocks became the main force in the market. In the spring market, people tend to pay attention to stocks with high annual report performance, as well as stocks with high turnover.

In the past, high-dividend assets were generally defensive, but slightly less offensive. High-dividend assets have not always outperformed the market. For example, in 2020, the Shanghai Composite Dividend Index, which represents the trend of high-dividend assets, fell by 5.69% against the trend, underperforming the Shanghai Composite Index by nearly 20 percentage points that year.

In addition, the interviewed experts believe that it is necessary to guard against the risks of high-dividend assets when looking at them objectively.

Chen Jianhua believes that in the future, the risk of high-dividend sectors may come from two aspects: first, the valuation of the continuous rise is increasing, resulting in the realization of long-term capital profits; second, with the implementation of a series of stable growth policies, if the domestic economic growth momentum is significantly enhanced, the market risk appetite is expected to rebound, and the disk style may be biased towards the growth sector, and the high-dividend sector may be under pressure at this stage.