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How much dividend income listed companies give to investors has become a hot topic of the year. On July 21, Beijing Business Daily reporters found that the five major A-share listed insurance companies plan to pay a total of more than 75 billion yuan in dividends in 2023, an increase of more than 20% over 2022. Judging from the amount to be distributed per share and the total dividend amount, Ping An of China is expected to pay a total dividend of 27.161 billion yuan in 2023, and plans to pay 1.5 yuan per share (tax included), ranking first. In the view of industry insiders, the implementation of the 2023 dividend plan of the five major A-share listed insurance companies not only demonstrates the profitability of insurance companies and their commitment to shareholder returns, but also sends a positive signal for the continued improvement of dividend levels in the future. This will help optimize the capital structure of insurance companies, improve shareholders' investment returns, and may further promote the healthy development of the insurance industry and the improvement of market valuations.

The dividend ratio is maintained at more than 30%

The dividend plan for 2023 of the five major listed insurance companies in the A-share market has been unveiled. On July 21, a Beijing Business Daily reporter found that the five major listed insurance companies will distribute a total of more than 75 billion yuan in dividends in 2023, an increase of more than 20% over 2022.

So far, China Life and China Pacific Insurance have both distributed cash dividends for 2023. For example, China Life recently announced that this profit distribution is based on the company's total share capital of 28.265 billion shares before the implementation of the plan, with a cash dividend of 0.43 yuan per share (including tax), and a total cash dividend of 12.154 billion yuan (including tax). The distribution date is July 11.

China Pacific Insurance recently announced that the profit distribution will be based on the company's total share capital of 9.62 billion shares before the implementation of the plan, with a cash dividend of 1.02 yuan per share (including tax), totaling 9.813 billion yuan in cash dividends. The payment date is July 12.

In terms of the dividend per share and the total dividend amount, Ping An of China will pay a cash dividend of 1.5 yuan per share (tax included) on July 26, 2024. According to previous announcements, Ping An of China's total dividend distribution for 2023 is expected to be 27.161 billion yuan. Together with the interim cash dividend paid in October 2023, Ping An of China will pay a cash dividend of 2.43 yuan per share for the whole year, with a total dividend of more than 44 billion yuan.

In addition, based on the 44.224 billion shares issued, PICC plans to pay a cash dividend of RMB 1.56 per 10 shares (including tax), totaling RMB 6.899 billion, to all shareholders. New China Life Insurance plans to pay a cash dividend of RMB 0.85 per share in 2023 to all shareholders, totaling RMB 2.652 billion, accounting for 30.4% of the net profit attributable to the parent company.

"The increase in annual dividend levels not only reflects the enhanced profitability of insurance companies, but also reflects their emphasis on shareholder returns," said Zhi Peiyuan, corporate mentor for master's students at the School of Management of China University of Mining and Technology (Beijing).

Regarding the fact that the five major listed insurance companies will pay a total of dividends in 2023, which will be significantly higher than the previous year, Bai Wenxi, vice chairman of the China Enterprise Capital Alliance, also said that for insurance companies, increasing dividends can boost investor confidence to a certain extent, attract incremental funds into the insurance sector, and help improve their performance in the capital market. At the same time, a stable dividend policy is conducive to the management of market value by insurance companies, and indirectly promotes the replenishment of solvency adequacy ratios through the capital market. For investors, increasing dividends can provide more stable cash flow, enhance the sense of gain, and may attract investors who prefer stable returns.

Beijing Business Daily reporter looked at the proportion of total cash dividends to net profit in 2023, and found that the five major listed insurance companies all exceeded 30%, with an average dividend ratio of over 45%. Among them, China Life had the highest cash dividend ratio, reaching 57.6%, and Ping An of China also exceeded 50%, at 51.37%.

Bai Wenxi said that listed insurance companies will consider multiple factors when setting dividend ratios, including but not limited to the company's operating performance, capital status, risk control indicators, market environment and regulatory requirements. Insurance companies need to balance the relationship between returning investors and achieving their own development by optimizing dividend policies.

Interim dividend follow-up

In April this year, the State Council issued the new "Nine National Regulations" which clearly proposed to strengthen the supervision of cash dividends of listed companies, increase incentives for high-quality dividend companies, and take multiple measures to promote the increase of dividend rates.

Beijing Business Daily reporter learned that on the basis of annual dividends, many listed insurance companies have launched 2024 mid-term dividend plans. Specifically, since the release of the new "National Nine Articles" on April 12, New China Life Insurance has become the first listed insurance company to follow up on "multiple dividends a year". In May, New China Life Insurance decided to implement the 2024 mid-term dividend distribution, and the total dividend will account for no more than 30% of the semi-annual net profit attributable to the parent company.

In June, PICC revealed that it plans to implement interim dividends in 2024. Subsequently, based on the relevant provisions of the Company's Articles of Association and the performance in the first half of 2024, it will comprehensively consider profit levels, shareholder returns, solvency and other factors, and formulate a specific interim dividend plan to be submitted to the board of directors and the general meeting of shareholders for deliberation.

According to an announcement released by China Life Insurance in June, if the company has distributable profits in the first half of 2024, cash dividends will be paid to all shareholders, and the total amount of interim cash dividends will not exceed 30% of the net profit attributable to the parent company's shareholders in the first half of 2024.

"Previously, New China Life Insurance has fired the first shot in the insurance industry's response to the new policy of 'Nine National Articles' and plans to implement mid-term dividend payments in 2024. This may indicate that there will be new trends in the frequency and proportion of cash dividends of listed insurance companies." Bai Wenxi said that considering the policy orientation of the new "Nine National Articles" and the market environment, it is expected that the annual dividend frequency of listed insurance companies may show an increasing trend in the future, and dividend policies will also pay more attention to stability, sustainability and predictability.

For insurance stocks themselves, increasing the frequency of dividends can improve shareholder returns and investment returns, enhance market confidence, and further increase the company's market value. Zhi Peiyuan said that many listed insurance companies have announced their mid-term dividend plans for 2024, showing their willingness to continue to pay dividends. This positive dividend behavior will not only help enhance market confidence in the insurance sector, but is also expected to further drive up stock prices, thereby increasing the market valuation of the entire insurance industry.

"The dividend policy of an insurance company has a direct impact on its stock price. Positive dividend performance can enhance investors' confidence in the insurance sector, which may increase the sector's valuation and drive insurance stocks to continue to rise." Bai Wenxi said that cash dividends, as a way to give back to shareholders, can increase investor confidence with their stability and sustainability, and have a positive impact on the company's long-term development.

The opening of the financial market and the development of the insurance industry have improved the profitability of listed insurance companies. However, they may also face certain pressure in terms of dividend policies. In Zhi Peiyuan's view, with the further opening of China's financial market and the continued development of the insurance industry, the profitability of listed insurance companies is expected to continue to improve. This will provide insurance companies with more financial support to support business expansion and innovative development. At the same time, as investors' attention to dividend income continues to increase, listed insurance companies will face greater pressure in formulating dividend policies and need to pay more attention to balancing profit growth and shareholder returns.

Beijing Business Daily reporter Hu Yongxin