Source: Dikon's World of Strategy
Authors: Wei Jixing, Dai Kang
The valuation restructuring of central state-owned enterprises has led “high dividends” back to investors' eyes. In our previous article, we continued to emphasize that the “revaluation of central state-owned enterprises” opportunities in '23 may continue throughout the year. The core of the “policy line change” of one of the three main lines of the year '23 is: “central state-owned enterprise revaluation+digital economy” has become a new gripper for credit broadening and “adding leverage.”In the context of the recent “revaluation of central state-owned enterprises,”$CHINA MOBILE (00941.HK)$,$CHINA TELECOM (00728.HK)$The announcement to further increase the dividend rate has made the “high dividend strategy” the focus of some investors.
However, traditional high dividend strategies do not have strong investment value in the medium to long term
We have previously analyzed the essence of traditional high dividend strategies: since 09.9, the annualized yield of the China Securities Dividend Full Yield Index has been able to slightly outperform Wind All A, but judging from the relative outperformance range, the full dividend yield index has only been superior to Wind A for about half of the time, and the high dividend rate factor of the past 13 years has not been very effective. At the same time, high dividend strategies do not achieve more significant “low retracement” and “low volatility” characteristics compared to biased hybrid funds.
Why can't traditional high dividend strategies continue to outperform Wind A? Two core “causes”:
(1) Traditional high dividend strategies have dividend traps,That is, high dividends in the past do not guarantee high dividends in the future, which will cause future dividend reinvestment to be affected;
(2) There are still valuation traps with traditional high dividends,In other words, the essence of a high dividend strategy is a deep value stock strategy. The profit side of an enterprise often lacks continuous growth, and investors cannot obtain the benefits of “growing together with the enterprise.” This makes it easy for the strategy to record significant negative contributions in terms of capital gains, but it is also difficult to achieve the characteristics of true “low volatility and low retracement.”
How to build an optimized high-dividend stock pool for A shares and Hong Kong stocks?
Through the two dimensions of “willingness to pay dividends” and “profitability,” we have fixed the two major “causes” in a targeted manner, and built a “100 high dividend for A shares” basic pool containing 100 A shares and a “50 high dividend for Hong Kong stocks” stock pool containing 50 Hong Kong stocks. However, the two major strategies based on A-shares and Hong Kong stocks are strategies for continued dominance: not only was the profit from 2009 last year around 20%, it was able to significantly outperform the corresponding benchmark index and the biased mixed fund index, and the maximum retracement was even lower, but it also had real dividend characteristics; at the same time, judging from the trend of all wind A/Wind in Hong Kong, the dominance range of the two strategies is also not divided between bulls and bears, and has continued to outperform and prevail over the past 13 years.
The “revaluation of central state-owned enterprises” opportunities may continue throughout the year, further constructing a “China Special Valuation and High Dividend Strategy.”Constructing a “China Special Valuation High Dividend Strategy” composed entirely of central state-owned enterprises can also achieve “high yields+high dividends+low retracement,” and high capital capacity. Driven by the “valuation system with Chinese characteristics,” the “China Special Valuation High Dividend Strategy” is expected not only to continue its outstanding performance in the past, but also to gain stronger upward momentum with beta support from the revaluation of central state-owned enterprises.
Risk warning:Worsening global liquidity, uncertainty about domestic recovery, etc. This article only puts forward relevant targets from a strategic perspective and does not replace the views of the relevant industry research team at GF Securities R&D Center.
Editor/Somer