Value stocks and growth stocks continued to show differentiation last week. The share price of China Shenhua Energy Company Limited(601088) among the former has reached a new high since 2009, and China State Construction Engineering Corporation Limited(601668) has also reached a new high since 2019. In addition, the undervalued “steady growth” sector represented by steel and construction machinery also had a stronger performance than the market last week.
For blue chip companies with good cash flow, the other side of undervaluation often means high dividends. Taking China Shenhua Energy Company Limited(601088) as an example, the dividend payout of its 2021 annual report reached 2.54 yuan per share. Based on its latest share price of 30.57 yuan, the dividend yield was as high as 8.3%, which was on the premise that the company’s share price had risen by more than 35% this year China State Construction Engineering Corporation Limited(601668) although the 2021 annual report has not been disclosed, as a traditional infrastructure blue chip, it has not been stingy in dividend distribution in history. Its dividend per share in 2020 was 0.215 yuan. Based on this calculation, its dividend rate corresponding to the latest share price also reached 3.5%, and its share price also recorded an 11% increase last week.
high dividends become the “umbrella” of the market
Soochow Securities Co.Ltd(601555) issued a strategy report this month, pointing out that due to factors such as the turbulence of the overseas situation, the overall market fell, and the income of public funds underperformed the market. In 2022 / 3, the market fell as a whole. The Shanghai Composite Index fell by 5.8% in the whole month. The average rate of return of active partial equity public funds was – 6.5%, which was no excess return compared with the market as a whole.
Generally speaking, in the period of decline and shock consolidation after the sharp rise of the market, the high dividend strategy gives full play to the characteristics of “umbrella”, and the excess return is obvious. The excess return in March was 15%, leading all strategy combinations. Especially in the first half of March, under the “internal worries” of economic growth and the “external aggression” of the peripheral situation, the market fell rapidly in the short term, and the high dividend strategy became the “ballast” during the period of market fluctuation.
The following is the high dividend stock pool selected by the institution:
high dividend concentrated in which sectors
Zheshang Securities Co.Ltd(601878) taking the arithmetic mean of the companies in the industry as the statistical standard of the dividend rate of each industry, from the perspective of industry distribution, as of March 28, the dividend rate of banking, steel and real estate industries was the highest, with the dividend rate (in recent 12 months) of 4.3%, 4% and 2.9% respectively. Among the other industries, the industries with the dividend rate of more than 2% were textile and clothing (2.8%), coal (2.6%), household appliances (2.2%), public utilities (2.2%) and commercial retail (2%).
The agency also pointed out that since the beginning of year, the spread between the yield and dividend yield of one-year treasury bonds has been narrowing. From the perspective of resumption, the narrowing of the spread between the interest rate and dividend yield of one-year treasury bonds is often a signal that the market has gradually stepped into the bottom area
Looking back on history, since 2002, there have been four rounds of narrowing periods of one-year treasury bond interest rate and wandequan A’s dividend yield in the A-share market, namely, August 2005 to May 2006, November 2008 to February 2009, may 2012 to November 2012 and may 2018 to December 2018. In these four periods, A shares gradually entered the bottom area.
the reason behind this phenomenon may be that when the dividend yield is close to or higher than the bond interest rate, the attractiveness of the stock market increases and the allocation value of stock assets increases since the beginning of the year, the difference between the dividend yield of wandequan A and the interest rate of one-year treasury bonds has fallen from 0.75% to 0.5%, which is close to the low point of the previous round of interest rate spread, and the cost performance advantage of stocks and bonds is obvious.
