The annual report season is also the dividend season. According to the data, as of March 13, 157 A-share companies had issued their annual reports for 2021, 108 planned cash dividends, and the total proposed dividends were 27.731 billion yuan, of which 20 companies proposed total cash dividends, accounting for more than 50% of the net profit of the year.
Experts interviewed said that companies with a high proportion of dividends often have better financial quality and lower valuation level. “However, for dividend plans that exceed market expectations, listed companies should also make explanations in time, so as to dispel the doubts that investors may have.”
6 companies with dividends exceeding 1 billion yuan
According to the sorting, among the 108 companies mentioned above, 6 companies intend to pay cash dividends of more than 1 billion yuan, Ping An Bank Co.Ltd(000001) , Citic Pacific Special Steel Group Co.Ltd(000708) , Ningxia Baofeng Energy Group Co.Ltd(600989) , Zte Corporation(000063) , China United Network Communications Limited(600050) and By-Health Co.Ltd(300146) respectively 4.425 billion yuan, 4.038 billion yuan, 2.048 billion yuan, 1.193 billion yuan, 1.192 billion yuan and 1.190 billion yuan.
In terms of the proportion of total cash dividends to the net profit of the current year, the proposed dividend amount of 20 companies accounts for more than 50%, of which 3 companies account for more than 100%, respectively 145.92%, Suzhou Hengmingda Electronic Technology Co.Ltd(002947) 11269% and Beijing Dahao Technology Corp.Ltd(603025) 10329%.
Tian Lihui, Dean of the Financial Development Research Institute of Nankai University, told the Securities Daily, “cash dividends of listed companies should consider the interests of minority shareholders and the development prospects of the company. Cash dividends are an important way to show the strength of the company, but it is best to make special explanations for excessive dividends.”
Changjiang Securities Company Limited(000783) chief strategist Bao Chengchao told the reporter of Securities Daily that the high dividend mainly comes from the cash flow distribution of the company under the demand of low capital expenditure. Generally speaking, after the enterprise enters the mature period, the return on investment stabilizes, the willingness to spend capital is low, and the willingness to pay dividends may increase. From the data research, low external financing dependence, low debt and excellent cash flow are often the premise to support high dividend companies to practice high profit distribution. In addition, in order to thicken the roe level and meet the dividend demand of shareholders, it may also be an important reason for the company to implement the high dividend scheme.
Dividend yield is one of the important indicators for investors to measure the investment value of enterprises. Based on the latest closing price (March 11), among the 108 companies, 16 listed companies have a dividend yield of more than 2%, of which 3 have a dividend yield of more than 4%. The dividend yields of Xinghui environmental materials, Huangshan Novel Co.Ltd(002014) , Bestsun Energy Co.Ltd(600681) and Bestsun Energy Co.Ltd(600681) are 5.61%, 5.39% and 4.75% respectively.
“For investors, the greatest significance of paying attention to dividends is to identify high-quality companies.” Bao Chengchao believes that listed companies pay attention to dividend distribution to shareholders, which is one of the signs of the gradual maturity of the securities market. High dividend companies often have better financial quality and lower valuation level, which is an important guarantee for the practice of high dividend strategy, that is, “deterministic high fixed income + more stable capital gain strategy”. According to statistics, under the holding period of five years, the absolute return and risk adjusted return advantages of high dividend portfolio are very obvious, but it also bears a large absolute fluctuation risk.
55 companies’ cash dividends in recent four years
Among the companies that have issued annual reports, 48 have no dividend plans, of which 12 are listed within half a year. According to the reporter’s reasons for not paying dividends, some companies are participating in the reorganization as reorganization investors, except that some companies have undistributed profits as losses at the end of 2021; Or there are outstanding debts, and affected by the epidemic and other factors, the company needs to enhance its ability to resist risks; Or there are multiple projects under construction, which need to invest a lot of money; Or comprehensively consider the company’s strategic planning and fund use arrangement, and decide not to implement dividend.
For some companies that do not pay dividends, Tian Lihui believes that “different companies have different problems and have their own considerations. The key is not whether to pay dividends in cash, but how to explain whether the company pays dividends or not and the recognition of these explanations by the market.”
In recent years, under the encouragement and guidance of supervision, listed companies have been increasing their efforts to repay investors. According to the data of China Securities Regulatory Commission, in 2021, listed companies paid a total dividend of 1.67 trillion yuan, a year-on-year increase of 17%. The dividend scale reached a new record and far exceeded the refinancing scale of Listed Companies in the same period.
At the same time, the dividends of listed companies are more stable and sustainable. The reporter has sorted out the cash dividends of the above-mentioned 55 companies in the past four consecutive years (from 2021 to 2018).
In January this year, the general office of the State Council issued the overall plan for the pilot of comprehensive reform of market-oriented allocation of factors, which proposed to explore ways to increase residents’ property income, encourage and guide listed companies to pay cash dividends, and improve the investor protection system.
Referring to the dividend of listed companies this year, Tian Lihui believes that with the promotion of value investment concept and the increase of investable objects, investors will more carefully examine the dividend behavior of listed companies and judge the quality of the company accordingly. With the expansion of the scale of the A-share market, the amount of dividends of listed companies will continue to increase this year, the proportion of dividends will be more rational, and the impact of dividends will be more positive.
