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This year, listed companies have shown a marked increase in their enthusiasm for mid-term dividends.

Text/Daily Financial Report Lv Mingxia

Currently, the A-share market has entered the "dividend season". With the release of performance forecasts, the A-share market has entered the mid-year report season, and the dividends of listed companies have also been released.

On the interactive platform, dividends have become a high-frequency word in investors' questions. Moreover, compared with previous years, this year, investors are particularly concerned about mid-term dividend arrangements and multiple dividends a year.

Under the guidance of the new "Nine National Regulations" to strengthen cash dividends, compared with previous years, the number of listed companies joining the mid-term dividend team has increased this year, and the dividend level has increased significantly. Which companies are planning mid-term dividends and "giving red envelopes" to shareholders? Which industries are the main force of mid-term dividends?

The popularity of mid-term dividends has increased

As the semi-annual report disclosure begins, listed companies are announcing interim dividend plans. According to Wind data, as of the evening of July 21, 172 listed companies have released interim dividend plans for 2024, and more than 200 companies have stated that they will make arrangements for interim dividends. It is expected that the total number of companies that will pay interim dividends will exceed 300. This number is close to more than 60% of the number of listed companies that will implement interim dividends in 2023.

It is worth mentioning that as early as April 2024, dozens of A-share companies had disclosed their 2024 mid-year dividend arrangements.

Compared with previous years, listed companies have released their mid-term dividend plans significantly earlier. Taking 2023 as an example, listed companies concentrated on disclosing their semi-annual profit distribution plans in late August, and a few companies even disclosed their mid-term dividend announcements as late as October.

In comparison, the enthusiasm of listed companies for mid-term dividends has increased this year compared with previous years. From 2019 to 2023, 128, 174, 186, 138 and 194 companies implemented mid-term dividends respectively.

So, what is the reason for the current large-scale dividends of listed companies? Analysts pointed out that the reason behind the large-scale dividends is the steady growth of listed companies' performance. According to incomplete statistics, as of July 21, 51 of the companies that proposed mid-term dividends this year have disclosed their first-half performance forecasts, and nearly 80% of them are expected to make profits.

Among them, the company with the highest expected profit is Sailun Tire, which expects to achieve an attributable net profit of 2.12 billion to 2.18 billion yuan in the first half of the year. In addition, Newway Group and Shanghai Energy expect to achieve attributable net profits of approximately 437 million to 572 million yuan and 460 million to 530 million yuan in the first half of the year, respectively. *ST Aonong, Zhonghe Technology, Fenghuo Electronics and other 7 companies disclosed their net profit forecasts in their semi-annual performance forecasts.

Which industries are the main force in mid-term dividends?

Which industries are the main force of mid-term dividends? From the perspective of the 100 companies that have launched mid-term dividend plans, according to the industry classification statistics of the China Securities Regulatory Commission, the top three industries are special equipment manufacturing, including computer, communication and other electronic equipment manufacturing, electrical machinery and equipment manufacturing; the pharmaceutical and biological industry ranks second; in addition, software and information services, chemical raw materials and chemical products manufacturing, and automobile manufacturing.

Which companies plan to pay large dividends? In terms of cash dividend ratio, many companies plan to pay dividends of more than 30%. Marubi's mid-term cash dividend ratio reaches 60%, Dongwu Securities and Laobaixing's dividend ratio reaches 50%, and NARI's dividend ratio is 40%. In addition, listed companies such as Changling Hydraulics and Nuotai Biotechnology have planned to pay dividends of 30%.

Starting from May, the six major banks have successively announced their mid-term dividend plans for 2024. Judging from the amount of dividends alone, the banking industry is the "king" of dividends. According to the profit distribution plans of various banks, the total dividend amount of the six major banks in 2023 reached 413.341 billion yuan, an increase from 404.761 billion yuan in 2022, setting a new record. In 2023, the dividend ratio of the six major banks will also remain stable at more than 30%. Among them, ICBC is the most "generous".

Listed companies may be more active in distributing dividends

The new "Company Law" came into effect on July 1, allowing listed companies to use capital reserves to make up for losses in previous years, and also creating conditions for high-performing companies with negative retained earnings to implement dividends.

In addition, since the beginning of this year, regulators have introduced a number of policies to encourage listed companies to increase dividends. The "Opinions on Strengthening the Supervision of Listed Companies (Trial)" issued by the China Securities Regulatory Commission on March 15 mentioned that it is necessary to promote multiple dividends a year, guide high-quality large-cap listed companies to pay mid-term dividends, and play a demonstration and leading role.

Subsequently, the new "Nine National Regulations" clearly proposed to strengthen the supervision of cash dividends of listed companies. For companies that have not paid dividends for many years or have a low dividend ratio, restrict major shareholders from reducing their holdings and implement risk warnings.

In accordance with regulatory requirements, the ST measures for companies that fail to meet cash dividend standards will be officially implemented on January 1, 2025. The "most recent three fiscal years" in the "assessment period" refers to 2022 to 2024. Listed companies affected by the rules need to increase their cash dividend levels during the transition period.

In accordance with the requirements, A-share listed companies should enhance the stability, continuity and predictability of dividends, and promote multiple dividends a year, pre-dividends and dividends before the Spring Festival.

China Aviation Securities said, "The new 'Nine National Regulations' strengthen the supervision of cash dividends of listed companies, which is expected to boost the market style towards high dividend sectors in the short term. Companies that originally have the ability and willingness to pay dividends but have low dividend rates may accelerate the increase of dividend rates and continue to contribute excess returns to investors."

Experts remind that from the perspective of business operations, while complying with relevant regulatory provisions, the dividend policy of listed companies must be coordinated with the company's development strategy, balance the relationship between dividends and reinvestment, and avoid excessive dividends affecting the company's long-term development.

At the same time, the dividend policy should be fair, transparent, relatively stable and sustainable to avoid damaging the interests of small and medium-sized investors. As investors, we should also avoid blindly pursuing high dividends and ignoring the overall value of the company.

Daily Financial Report

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