Investors Flock to High-Dividend Assets, An Overview of High Dividend Yield Stocks Over the Past Three Years
On July 2nd, the A-share market witnessed a mixed performance, with large cap dividend assets represented by banks soaring to historical highs. Analysts stated that under the dual resonance of policy and market logic, high-dividend assets characterized by monopoly and scarcity are expected to undergo a significant revaluation of their worth.
The rising demand for high-dividend assets reached its peak as shares from the top ten A-share valuation companies all saw rises, each prominent in their dividend yield rankings. On that day, despite the overall weak market performance showing a slight decline of 0.37% in the full A share index and a transaction volume at a steady low of 6472 billion yuan, these companies continued their price ascent. By the close of July 2nd, notable stocks like ICBC, China Mobile, Agricultural Bank of China, China Construction Bank, CNOOC, and China Shenhua achieved new historical highs. ICBC notably topped the valuation charts with an impressive market capitalization of 19858 billion yuan, reflecting a persistent upward trend in its stock price, accumulating a year-to-date increase of 24.9%.
The banking sector, as a significant catalyst in the market's recent uplift, marked seven consecutive positive trading days. According to Wind data on July 2nd, the banking sector rose by 1.61%, bucking market trends with over a 5% increase since late June, becoming the strongest performer in the adjustment market scenario. Since the beginning of the year, the banking sector has achieved a cumulative gain of 23.09%, ranking first among Wind's 24 secondary industry sectors in terms of increase. Current evaluations indicate the sector's PE sits below 6 times, with many bank stocks offering dividend yields exceeding 5%. Analysts from Ping An Securities, Yuan Zeqi and Xu Miao, continue favoring the banking sector throughout the year. In a backdrop marked by asset scarcity, banks still hold significant fixed-income asset value. They report the sector's current valuation on a static basis at 0.58 times with a dividend yield of 4.8%, which resides high above the risk-free rate.
On the same day, Kweichow Moutai soared by 3.49%, momentarily reaching a 4% spike and recovering from previous losses, stimulating the food and beverage sector as other related stocks like Jinzhongzi Wine, Tianye Shares, and Huangtai Liquor also experienced high trading activity. Recent reports noted surges in Moutai's prices across various vintages by 50-70 yuan per bottle, showing an overall positive trend in the alcohol sector.
Market insiders posit that market trends are propelled externally, linking both the banking sector's strength and Kweichow Moutai's rebound to a broader stabilization in China's economic landscape. GF Securities suggests that in the early stages of economic recovery, with reduced market risk appetite, dividend assets demonstrate stability and yield potential amid market fluctuations, acting as a reliable counterbalance in uncertain times. They predict a favorable rebound in dividend assets shortly and recommend investors to closely monitor investment opportunities in state-owned sectors such as banking, building materials, steel, oil, and natural gas.
Looking ahead, Ping An Securities projects potential incoming funds to sustain a vital role in driving valuation uplifts for high-dividend assets. On the one hand, they suggest monitoring insurance fund flows which post-implementation of new accounting standards may prefer investing in high-dividend equity assets and recognizing them as FVOCI to mitigate stock price volatility impacts on profit and loss statements. High-dividend bank stocks are particularly attractive to such funds. On the other hand, they advocate observing the premium rates and dividend yields of state-owned major bank stocks in both A and H shares, noting disparities often favoring H shares in dividend yield. Proposals during recent governmental sessions such as those from the Hong Kong Securities Regulatory Commission chairman concerning reduced taxation levels on dividend income for individual investors and lowered entry standards for mainland investors in the Hong Kong Stock Connect, may also stimulate investment enthusiasm toward high-dividend sectors in Hong Kong stocks.
As market and policy logic coalesce, the intrinsic monopolistic and scarce nature of high-dividend assets are well-positioned for a substantial value reassessment. This transition caps a period where heightened attention to high-dividend assets explores a new breadth within the market, evidenced by continued performance and strategic asset positioning.
The rising demand for high-dividend assets reached its peak as shares from the top ten A-share valuation companies all saw rises, each prominent in their dividend yield rankings. On that day, despite the overall weak market performance showing a slight decline of 0.37% in the full A share index and a transaction volume at a steady low of 6472 billion yuan, these companies continued their price ascent. By the close of July 2nd, notable stocks like ICBC, China Mobile, Agricultural Bank of China, China Construction Bank, CNOOC, and China Shenhua achieved new historical highs. ICBC notably topped the valuation charts with an impressive market capitalization of 19858 billion yuan, reflecting a persistent upward trend in its stock price, accumulating a year-to-date increase of 24.9%.
The banking sector, as a significant catalyst in the market's recent uplift, marked seven consecutive positive trading days. According to Wind data on July 2nd, the banking sector rose by 1.61%, bucking market trends with over a 5% increase since late June, becoming the strongest performer in the adjustment market scenario. Since the beginning of the year, the banking sector has achieved a cumulative gain of 23.09%, ranking first among Wind's 24 secondary industry sectors in terms of increase. Current evaluations indicate the sector's PE sits below 6 times, with many bank stocks offering dividend yields exceeding 5%. Analysts from Ping An Securities, Yuan Zeqi and Xu Miao, continue favoring the banking sector throughout the year. In a backdrop marked by asset scarcity, banks still hold significant fixed-income asset value. They report the sector's current valuation on a static basis at 0.58 times with a dividend yield of 4.8%, which resides high above the risk-free rate.
On the same day, Kweichow Moutai soared by 3.49%, momentarily reaching a 4% spike and recovering from previous losses, stimulating the food and beverage sector as other related stocks like Jinzhongzi Wine, Tianye Shares, and Huangtai Liquor also experienced high trading activity. Recent reports noted surges in Moutai's prices across various vintages by 50-70 yuan per bottle, showing an overall positive trend in the alcohol sector.
Market insiders posit that market trends are propelled externally, linking both the banking sector's strength and Kweichow Moutai's rebound to a broader stabilization in China's economic landscape. GF Securities suggests that in the early stages of economic recovery, with reduced market risk appetite, dividend assets demonstrate stability and yield potential amid market fluctuations, acting as a reliable counterbalance in uncertain times. They predict a favorable rebound in dividend assets shortly and recommend investors to closely monitor investment opportunities in state-owned sectors such as banking, building materials, steel, oil, and natural gas.
Looking ahead, Ping An Securities projects potential incoming funds to sustain a vital role in driving valuation uplifts for high-dividend assets. On the one hand, they suggest monitoring insurance fund flows which post-implementation of new accounting standards may prefer investing in high-dividend equity assets and recognizing them as FVOCI to mitigate stock price volatility impacts on profit and loss statements. High-dividend bank stocks are particularly attractive to such funds. On the other hand, they advocate observing the premium rates and dividend yields of state-owned major bank stocks in both A and H shares, noting disparities often favoring H shares in dividend yield. Proposals during recent governmental sessions such as those from the Hong Kong Securities Regulatory Commission chairman concerning reduced taxation levels on dividend income for individual investors and lowered entry standards for mainland investors in the Hong Kong Stock Connect, may also stimulate investment enthusiasm toward high-dividend sectors in Hong Kong stocks.
As market and policy logic coalesce, the intrinsic monopolistic and scarce nature of high-dividend assets are well-positioned for a substantial value reassessment. This transition caps a period where heightened attention to high-dividend assets explores a new breadth within the market, evidenced by continued performance and strategic asset positioning.
Last edited at：2024/12/16
#Kweichow Moutai