Financial Services Association, June 6 (Reporter Yan Jun) Currently, the ETF market is slightly deserted; however, “roll” dividends have become a new way to play ETFs.

At the end of May, Wanjia's dividend ETF fund issued a dividend announcement. This is the first time since the ETF was listed that it paid monthly dividends. The fund is listed on the Shenzhen Stock Exchange and is the first domestic dividend ETF product with monthly evaluation and monthly dividends.

According to the fund contract, Wanjia regularly evaluates the excess yield of the dividend ETF fund once a month, and the income can be distributed when the excess yield reaches 0.01% or more. This means that if the market is supported, this fund can pay dividends 12 times a year.

Since the new “National Nine Rules”, regulations have actively guided and promoted listed companies to return investors through dividends. This “dividend” trend has also spread to fund companies. In particular, in the process of issuing new ETFs and holding, the proportion of dividends appearing is getting higher and higher.

ETF dividends have increased markedly, and broad-based ETFs account for an absolute share

Morgan Asset Management's main focus on the “dividend” China Securities A50 ETF left a deep impression on investors during the first batch of 10 China Securities A50 ETF issuance battles.

Subsequently, the ICBC Credit Suisse China Securities A50 ETF Fund, which had been listed for less than a month, took the lead in implementing dividends. Dividends are gradually becoming the trend and standard for ETFs.

According to data from the Shanghai Stock Exchange, since this year, the Shanghai market has ushered in a dividend boom of many stock ETFs. A total of 6 ETFs have announced dividends, with a total amount of 4.683 billion yuan, accounting for nearly 90% of the total dividends of index funds.

Of the 6 dividend ETFs in Shanghai, broad-based ETFs account for the majority. A total of 4 broad-based ETFs participated in dividends, with a total amount of 3.841 billion yuan, accounting for 82%. In addition, two dividend ETFs also participated in this dividend, with a total dividend amount of 842 million yuan.

It is worth mentioning that the Huatai Berry Shanghai and Shenzhen 300 ETF is the only Big Mac product on the market with a management scale of over 200 billion dollars. Since its establishment in 2012, it has continued to distribute dividends every year. On January 23 of this year, the ETF paid another large dividend. The dividend amount reached 2,494 billion yuan, and the dividend ratio reached 1.97%, accounting for as much as 60% of the Shanghai ETF dividends.

Furthermore, the China Securities 500 ETF, which is the largest in the market, recently paid dividends. China Southern Fund issued an announcement stating that its China Securities 500 ETF will pay the first dividend in 2024 using April 30 as the revenue distribution reference date. The current dividend plan is to distribute 0.87 yuan for every 10 fund shares, and the cash dividend payment date is May 22. Based on the number of fund shares on the reference date, the total dividends of the China Southern Securities 500 ETF will exceed 1.2 billion yuan this time. This dividend is also the first time the ETF has announced a dividend since its establishment in February 2013.

In recent years, indexed investment methods have been increasingly recognized by investors. Index funds also actively give back to investors through dividends. In 2023, index funds paid 11.5 billion yuan, of which stock ETFs paid 8.6 billion yuan, accounting for 75% of the amount.

What is particularly noteworthy is the marked increase in the strength and frequency of broad-based ETF dividends. A total of 12 broad-based ETFs paid dividends in 2023, with a total dividend amount of 5.05 billion yuan, a significant increase from the average number (4.4) and average dividend amount (2,586 billion yuan) over the past five years.

Dividend ETFs are highly compatible with dividends

In addition to broad-based ETFs, dividend funds are also highly compatible with dividends.

In recent years, the interest rate center has continued to decline, and the 10-year treasury bond maturity yield has fallen to 2.31%. In the phase of economic transformation and declining interest rates, the annual dividend rate of the China Securities Dividend Index continued to rise, from 4.24% in 2019 to 6.20% in 2023. In the era of low interest rates, the investment value of the China Securities Dividend is further highlighted by its decisive advantage of high dividends.

At the same time, the new “National Nine Rules” strengthened the supervision of cash dividends for listed companies. By the end of April, 3,859 listed companies had announced or implemented 2023 cash dividend plans, with a total cash dividend amount of 2.24 trillion yuan, a record high. The underlying index China Securities dividend tracked by the dividend ETF fund brings together high-dividend listed companies and is expected to benefit from it.

As regulations of listed companies become stricter and dividend requirements continue to rise, dividend stocks are expected to continue to dominate, and high-frequency dividend ETF products have a foundation for long-term dividends and stable dividends.

The Cathay Pacific dividend ETF, which paid dividends on May 24, also stated that since the underlying index has the advantage of a high dividend rate, according to the fund contract, the fund manager can evaluate and distribute income on a monthly basis, and can arrange income distribution if the fund's dividend conditions are met. Although there is no mandatory requirement, dividends can theoretically be paid up to 12 times a year.

Since its establishment 18 years ago, the Huatai Berry Dividend ETF, which is the largest in the market, has accumulated profits of nearly 5 billion yuan in the past 10 years. Since its establishment, the dividend ETF has been distributed 17 times, and the total amount of dividends has exceeded 3.2 billion yuan. Its distinctive high dividend characteristics have brought considerable long-term returns to investors.

The ETF dividend mechanism will continue to be optimized

In response to this, investors also have questions. After the fund dividends, it is the investor's own fund assets that fall back in the bag. Why should fund companies emphasize dividends now?

On the one hand, promoting the listing of high-frequency dividend ETF products is a regulatory requirement. Through high-frequency dividend efforts, investors can be provided with high-frequency cash flow returns, enhanced the safe investment experience, and investors' sense of acquisition was highlighted during the product opening phase.

On the other hand, as the enthusiasm and certainty of fund product dividends continues to increase, ETF managers are also continuously optimizing dividend mechanism settings to enhance investors' holding experience, such as setting mandatory dividend clauses, lowering the dividend threshold, and increasing the frequency of dividends. Some ETF agreements require quarterly or even monthly income distribution, providing investors with predictable and stable cash flow.