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recently, a-share high-dividend assets have experienced a significant correction. in this regard, some institutional investors believe that due to the excessive concentration of funds in the dividend sector, trading is too crowded, and the semi-annual performance of some heavily-weighted stocks is lower than expected, causing a certain degree of market stampede.

however, the positive impact of dividend strategies on a-shares is gradually deepening. in order to meet the cash flow needs of large funds such as insurance institutions, listed companies are also constantly adjusting their shareholder return strategies, and more and more companies are increasing the amount of dividends and the number of dividends per year.

many market participants said in an interview with the securities times reporter that as the market's understanding of dividend assets deepens, listed companies will pay more attention to shareholder returns in the future and improve the return on investment in the capital market. increasing the number and scale of dividends can greatly increase the attractiveness of listed companies to long-term funds, thereby attracting more funds to enter the market.

dividend assets attract long-term investors

with the attention of all parties in the market, the high dividend strategy has been increasingly sought after since the middle of last year, and stocks in sectors such as hydropower, coal, and highways have continued to rise. for example, since august last year, china yangtze power has risen for 11 months out of 12 months, with a share price increase of more than 50%.

however, after the share price of china yangtze power reached 31.44 yuan in july this year, it began to fall back. as of september 20, it was reported at 28.15 yuan per share, a decline of about 10%.

yangtze power is just one example. since the middle of this year, the market's recognized high dividend sectors, including coal and hydropower, have all experienced significant corrections. for example, the coal leader china shenhua once pulled back more than 20%.

"the current adjustment in the dividend sector is mainly due to factors such as high short-term trading congestion and the possible decline in the prosperity of some industries." deng lijun, chief strategy analyst of huajin securities, told the securities times reporter that the current high-dividend sector is already highly crowded in the short term, and the current historical percentile of the turnover rate of the dividend index exceeds 70%, and the transaction volume accounts for about 5% of the total a-share transaction volume. in terms of holdings, the historical percentile of high-dividend sector funds also exceeds 80%.

xu chi, chief strategy analyst at china securities, also believes that funds were previously over-concentrated in the dividend sector, resulting in overly crowded trading, and the performance of some heavily-weighted stocks in the semi-annual report was lower than expected, causing a certain degree of stampede in the market.

however, dividend assets are still favored. xu chi said that the pursuit of dividend assets by institutional investors is essentially a risk-averse demand under a prudent mindset. considering that the current stability of the aggregate policy and the direction of strong financial supervision have not changed, it is expected that the conservative style such as dividends will still be the dominant style in the second half of the year.

yang chao, chief strategy analyst at galaxy securities, believes that from the current macroeconomic background, the global interest rate cut environment can actually enhance the attractiveness of dividend assets, and stocks or assets that pay high dividends are more attractive because they provide relatively high yields. therefore, despite the market sector rotation, dividend assets can still attract long-term holders.

listed companies take the initiative to increase dividends

the impact of dividend strategy on a-shares is gradually deepening. after the dividend strategy became popular, in order to meet the cash flow needs of large funds such as insurance institutions, listed companies have also been constantly adjusting their shareholder return strategies, such as increasing the dividend amount and increasing the number of dividends within the year.

in this year's semi-annual report, more than 670 listed companies released mid-term cash dividend plans or plans for 2024, involving a total dividend of 528.8 billion yuan. the number of listed companies planning mid-term dividends has exceeded the total of the previous three years, and the total dividend amount has also reached a historical high.

"under the current macro environment and policy orientation, mid-term dividend stocks with advantages such as stable cash flow, high short-term profit certainty and reinvestment are more likely to be favored by investors," said deng lijun.

he analyzed that institutional investors such as public funds, pension funds, and insurance companies usually pay more attention to long-term and stable cash inflows, while stocks with mid-term dividends can provide stable cash returns and enhance the risk resistance of the investment portfolio. especially in the current context of overall weakness in the market, dividends provide a certain return guarantee. mid-term dividends can also allow institutional investors to realize part of the returns in a relatively short period of time, enhancing the certainty of short-term returns. in addition, institutional investors can continue to increase their holdings of high-quality assets by reinvesting dividends.

xu chi explained to reporters that institutional investors who prefer low-risk and long-term investments place more emphasis on stable cash flow and regular income returns, and stocks with interim dividends or multiple dividends a year have more stable overall returns and relatively lower risks, so they are more in line with the "stable" requirements of such investors. in addition, the overall profitability and cash flow health of stocks with interim dividends can be guaranteed, and interim dividends can optimize the efficiency of the company's capital use, so the overall quality of such listed companies is relatively better.

"interim dividends, as a form of capital return, can provide more frequent cash inflows and increase investors' financial flexibility. for institutional investors, frequent and predictable cash flows are important factors in managing large-scale funds and help them optimize the capital allocation of their investment portfolios," said yang chao.

enhance the long-term investment value of a shares

dividend strategies and listed companies' behaviors reinforce each other, which can further improve the a-share ecosystem and enhance the long-term investment value of a-shares.

xu chi believes that as the market's understanding of dividend assets deepens, listed companies will pay more attention to shareholder returns, strengthen information disclosure, and increase dividend ratios in the future, thereby improving the return on investment in the capital market. on the other hand, as listed companies increase dividends, the increased attractiveness of dividends will also shift investors' investments to identifying high-quality listed companies that are truly worth investing in and making long-term investments, which will help improve investors' investment behavior, reduce market volatility, and promote the transformation of the capital market from a "financing market" to an "investment market."

"increased dividends are conducive to improving the quality of listed companies, attracting long-term funds into the market, and supporting stock prices. listed companies may pay more attention to shareholder returns, and the proportion of long-term investors may increase." deng lijun said that as the understanding of dividend assets further increases, more companies may give priority to returning shareholders by stabilizing or gradually increasing dividends, prompting listed companies to pay more attention to cash flow management and long-term profitability in their operations. at the same time, it will promote the optimization of investor structure and increase the proportion of long-term investors. the income-oriented investment strategy with dividends as the core will be more widely promoted in the a-share market.

yang chao also said that the overall increase in the number and size of dividends paid by listed companies can not only optimize the structure of the capital market, but also improve the behavior of market participants:

first, it improves the maturity and stability of the market. frequent and large-scale cash dividends by listed companies can demonstrate that the company has good financial conditions and sufficient cash flow, which can attract more patient capital and stable investors, such as pension funds and insurance companies. such changes in investment behavior can help reduce market volatility and improve overall market stability.

second, it should enhance the shareholder return awareness of listed companies. the improvement of dividend policy usually reflects the listed companies’ emphasis on shareholder rights and interests, and can encourage more companies to adopt shareholder-friendly governance structures and operating strategies.

third, it effectively improves the liquidity of market funds. when shareholders receive cash dividends, these funds are conducive to activating the market and enhancing economic vitality.

fourth, it promotes the formation of a value investment culture. the increase in dividend policies and the expansion of their scale will guide investors to focus on the fundamentals and long-term value of enterprises, rather than simply chasing short-term benefits brought by stock price fluctuations. this will help to form a more rational and mature investment environment, reduce unnecessary speculation, and encourage the market to pay more attention to the real growth and profitability of enterprises.