Source: China Merchants Financial Cycle Research

As of December 23, 2024, 22 A-share listed Banks and 10 H-share listed Banks have disclosed their mid-term dividend plans for 2024, of which 9 Banks have already distributed their mid-term dividends within the year, while some Banks are expected to distribute them at the start of next year, and several Banks have not disclosed their mid-term dividends.

It should be noted that it is expected that the vast majority of Banks' mid-term dividends are not additional dividends but are part of previous annual dividend plans, meaning that a portion of last year's annual dividends is distributed in two installments; therefore, the final dividend for Banks should be assessed based on the annual dividend rate rather than considering the Banks that have not distributed mid-term dividends as having a lower final dividend rate.

However, since the default calculation method for dividend yield on the Wind and Hithink RoyalFlush Information Network terminals is 'total actual dividends per share over the past 12 months / current stock price', this could lead to an issue. For Banks that have distributed mid-term dividends, the dividend amount for the past 12 months includes the 2023 annual dividends and the 2024 mid-term dividends, which effectively amounts to 1.5 years of dividends. Meanwhile, for Banks that have not paid or disclosed mid-term dividends, the dividend yield reflects only the single-year dividend from 2023, potentially distorting the nominal dividend yield rankings. Additionally, this calculation method is based on historical actual dividends and does not account for the different profit growth rates among various companies, leading to a dynamic dividend yield impact.

How to accurately calculate the dynamic dividend yield? To avoid distortion of the TTM dividend yield across periods, a simplified and relatively accurate method for calculating the dynamic dividend yield is 'rolling 12 months EPS * cash dividend rate / stock price per share', which converts to 'cash dividend rate / PE (TTM)'. The benefit of this calculation is that it avoids the overlap or gaps between annual and mid-term dividends and takes into account the current real profit growth rate differences. In this calculation method, the value of the cash dividend rate is crucial, as Table 1 shows the calculation of the dividend yield based on three methods: 2023 annual dividend rate, 2024 first half dividend rate, and 'the greater of 2023 and 2024 first half dividend rate'. Refer to Tables 1 and 2 for details.

When will the mid-term dividends be credited? For mid-term dividends that have been declared but not yet distributed, Industrial And Commercial Bank Of China, Agricultural Bank Of China, Postal Savings Bank Of China, and Chongqing Rural Commercial Bank will distribute dividends on January 7, 2025, January 8, 2025, January 8, 2025, and January 23, 2025, respectively. Bank Of China and Bank Of Communications will distribute dividends on January 23 and January 24, 2025. Most H shares will distribute dividends in 2025, with H shares paying dividends in January including China Construction Bank Corporation, Chongqing Rural Commercial Bank, Postal Savings Bank Of China, Industrial And Commercial Bank Of China, Agricultural Bank Of China, and China CITIC Bank Corporation; H shares paying dividends in February include Bank Of Communications, Bank Of China, and China Everbright Bank.

When is the latest time one can buy to receive mid-term dividends? From the critical time points of the dividend ex-rights, there are differences between A shares and H shares regarding the ex-dividend date and record date. The ex-dividend date for A shares is the next trading day after the record date, and the dividends will be distributed to the stock accounts after automatic tax deduction, with the stock price adjusted to reflect the dividends already distributed. The ex-dividend date for H shares typically occurs before the record date, marking when stock trading no longer includes the upcoming dividends or bonuses. Investors purchasing stocks after the ex-dividend date will not receive this dividend. See Figures 1-2.

Since the beginning of next year will be a peak period for distributing mid-term Dividends, some investors in dividends will need to Buy the corresponding Stocks before the last trading day of the distribution in order to obtain the semi-annual Dividends. Therefore, at the end of the year and the beginning of the year, there may be a market for mid-term Dividend rush for some Banks symbols, which has already shown some performance in the recent market.

Risk warning: changes in Dividend policies; policy strength lower than expected; economic recovery less than expected.

编辑/jayden