According to the Zhito Finance APP, CITIC SEC has released a research report stating that from January 1, 2024, to November 30, 2024, the total dividend amount of all Hong Kong stocks is expected to reach 1,225.1 billion yuan, a year-on-year increase of 13%, marking a return to the high growth period of dividends seen in 2021 and 2022. Given that the level of dividend payments is relatively close, the dividend yield of Hong Kong stocks has reached 4.2%, which is 1.9 times that of A-share dividend yields. By industry, Finance, Real Estate, and NENGYUANHANGYE lead in dividend amounts and dividend yields. From an individual stock perspective, companies with high dividends in Hong Kong are generally central state-owned enterprises listed in Hong Kong. Additionally, under the new accounting standards, it is expected that insurance funds will continue to increase their allocation to high-dividend assets in 2025, and adjustments in the dividend tax for Hong Kong Stock Connect are imperative, which will enhance the attractiveness of high-dividend stocks in Hong Kong.

The main points of the Citic Securities research report are as follows:

The CSI Dividend Index has been adjusted, and funds into dividend ETFs continue to see inflow.

With index adjustments and the ten-year government bond yield breaking 2%, the cost-performance ratio of dividend assets is being highlighted. The CSI Dividend Index was adjusted on December 16, 2024, with pre-adjustment component stocks showing that the finance and cyclical industries continue to dominate. The dividend yield TTM increased from 5.40% to 5.55%, and ROE improved from 5.00% to 5.24%, with fundamental indicators showing varying degrees of enhancement.

Dividend ETFs showed a continuous net inflow in December, with a total inflow amount of 10.833 billion yuan as of December 20, 2024, and the current total scale of dividend ETFs reaching 79.294 billion yuan. In terms of holder structure, institutional investors are the main holders of dividend ETFs, with the proportion of institutional holders in low-volatility dividend ETFs reaching as high as 91.64%, significantly higher than that of individual investors.

Confidence has been boosted, and Hong Kong stock valuations are gradually recovering. Major Hong Kong stock indices experienced significant increases at the end of September. From a valuation perspective, the current valuation level of Hong Kong stocks remains at a historically low point. In terms of purchase amounts, the Hong Kong Stock Connect achieved a continuous net inflow of funds for 17 consecutive months from July 2023 to November 30, 2024, and the short-selling ratio in Hong Kong stocks has returned below the historical average.

The differentiation of returns from Insurance funds is notable, and there is still room for improvement in high-dividend positions.

Interest rates are running at low levels, leading to a differentiation in insurance fund returns. From the investment income of A-share listed insurance companies, the net investment return rate and total investment return rate for H1 2024 show a diverging trend, mainly due to the continuous decline in domestic interest rates and the scarcity of quality symbols.

The total market cap of heavily held stocks by insurance funds has significantly increased, but the proportion of high-dividend stocks has slightly decreased, indicating potential for future growth. According to Q3 2024 data, the total market cap of insurance company heavily held stocks is 482.494 billion yuan, an increase of 111.61 billion yuan compared to the previous period (H1 2024), with Banks being the main holding industry, accounting for 36.49%. Using TTM dividend yield to categorize the heavily held stocks, the proportion of holdings in high-dividend stocks (TTM dividend yield greater than 3%) has slightly decreased, but insurance capital still has substantial room for increasing allocations to high-dividend stocks. Moreover, the dividend yield level of insurance heavily held stocks is highly correlated with the trend of the CSI Dividend Index and the All Market, and currently, the dividend yields of insurance heavily held stocks have decreased.

The dividend yield of the CSI Dividend Index and the yield spread over the 10-year bond has continued to rise. Currently, the dividend yield of the CSI Dividend Index compared to the 10-year government bond yield has a spread of 3.25%, and the congestion level of the CSI Dividend Index relative to the All Market is at the 35.24th percentile for the year, improving the cost-performance ratio of allocations.

Under the new accounting standards, it is expected that insurance funds will continue to increase allocations to high-dividend assets in 2025. High-dividend stocks are suitable investment symbols for insurance funds under the new accounting standards, and it is anticipated that the scale of insurance capital's incremental allocation to high-dividend assets counted in the OCI accounting category will reach 809.9 billion yuan by 2025. The reduction of dividends and interest distribution fees is expected to alleviate the burden on listed companies, encouraging more dividend actions. Additionally, adjustments to the dividend tax for Hong Kong Stock Connect are imperative and will enhance the attractiveness of high-dividend stocks in the Hong Kong market.

In 2024, Hong Kong stocks will once again welcome a period of high dividend growth, with dividend yield levels significantly higher than those of A-shares.

From January 1, 2024, to November 30, 2024, the total dividend amount for all Hong Kong stocks reached 1225.1 billion yuan, with a year-on-year growth of 13%, marking a return to the high growth period of dividends in 2021 and 2022. Under similar levels of dividend payouts, the dividend yield for Hong Kong stocks reached 4.2%, which is 1.9 times that of A-share dividend yield levels.

By industry, Financial, Real Estate, and NENGYUANHANGYE have the highest dividend amounts and dividend yields. In terms of individual stocks, companies with high dividends in Hong Kong stocks are generally state-owned enterprises listed on the Hong Kong Stock Exchange.

Companies that implement dividends can achieve relatively excess returns, but caution is needed regarding the 'valuation trap'.

Statistics have been conducted based on whether companies pay dividends and their dividend yield rankings. The results show that companies that implement dividends generally achieve excess returns compared to those that do not pay dividends. From 2019 to 2024, the average return in the years of implementation was an excess return of 8.3% and 3.0% in the following year.

From the perspective of dividend yield, although there is a certain positive correlation between dividend yield and return levels, higher dividend yields do not necessarily mean better returns. One must be cautious of the 'valuation trap' among companies with excessively high dividend yields. Additionally, companies with a continuously increasing willingness to pay dividends are more likely to achieve excess returns; companies that have increased their dividend yields for four consecutive years had an average return 15% higher than those with declining dividend yields.

The Hong Kong stock dividend index generally outperforms the broad-based index, and it has significant advantages in metrics such as maximum drawdown, volatility, and Sharpe ratio.

Currently, the market has a rich variety of Hong Kong stock dividend indices, with Hang Seng, CSI, and S&P all publishing corresponding thematic indices. In terms of return, the Hong Kong stock dividend index has generally achieved excess returns compared to the broad-based index over the past three years; additionally, it has distinct advantages in volatility and maximum drawdown compared to the broad-based index. Each index generally overweights Banks, non-bank financials, and Transportation industries, focusing primarily on medium-large market cap companies, with allocations to companies with a market cap of over 100 billion typically reaching 50%.

Risk factors:

Historical Data does not represent future returns; domestic policy intensity, implementation effects, and economic recovery may fall short of expectations; macro liquidity both at home and abroad is tightening beyond expectations.