Stocks with recent high dividends have once again stood in front of most retail investors.
The CSI Dividend ETF has hit a record high and has become the most beautiful in the market.
In February 2021, the Shanghai Composite Index began to adjust.
The CSI 300 range has fallen by more than 47%, but the ETF of CSI Dividend has risen by 55% in the past three years.
What a painful realization!
The direction of high dividends can be said to be bullish all the way, and there is no turning back.
The largest drawdown occurred in September-October 2022, with a range drawdown of about 14%.
The rest of the time, it's basically a smooth road, and occasionally there are declines that can be quickly made up.
The market has defined a new concept of high dividends, called the "Four Musketeers of Dividends".
The first swordsman, the bank.
The banks here mainly refer to the four major banks of industry and agriculture.
The Big Four have been paying high dividends for many years.
Taking the Agricultural Bank as an example, the stock price is 4 yuan, the dividend is more than 0.2, and the dividend yield has been maintained at more than 5% for a long time.
Extreme share price lows, dividend yields soaring above 7%.
Needless to say, the bank's performance has been unusually stable, albeit not growing much.
The second swordsman, coal.
Shaanxi Coal Industry, Mountain Coal International, China Shenhua.
The trend of coal tycoons in the past three years can be described as soaring, so much so that it is called "black gold" by the market.
The daily dividend yield is very high.
Taking China Shenhua, the coal boss, as an example, for several consecutive years, it has been 10 shares and 20+ dividends, with a dividend yield of more than 5%.
The third musketeer, electricity.
The most representative power stock, needless to say, Yangtze Power.
This industry is unusually stable, the stock price is also very stable, and the dividends are as always.
I have only heard of the shortage of electricity, and I have heard that the price of electricity will rise, and it can be said that it is an industry that guarantees income during drought and flood.
The fourth musketeer, oil.
Sinopec, PetroChina, and CNOOC are the three musketeers of oil.
The Three Musketeers not only have good performance and good dividends in the past two years, but more importantly, the stock price has soared.
If we talk about banks, coal, electricity, it is a steady rise.
Oil has risen dramatically.
PetroChina, in the past three years, has more than tripled, and it can be said that it is the return of the king.
The four musketeers of dividends not only have stable dividends, but also the stock price has risen steadily, which has directly driven the trend of CSI dividends.
This stable investment style has also become a favorite of the market for a while.
Originally, retail investors were actually very indifferent to this direction.
But in the face of hard facts, retail investors have also begun to lay out this kind of inconspicuous high-dividend stocks.
So, in the current position, is it risky to invest in the direction of high dividends?
A: The risk is not small.
The direction of high dividends, whether you want to invest or not, depends on whether you want the stock price to rise, or simply just dividends.
If you just look at dividends, you don't care about the fluctuation of stock prices.
Then when the performance of these sectors does not fluctuate much, the dividend yield is relatively guaranteed, that is, the potential return rate will not be too bad, and the risk is not large.
But if you are still counting on the direction of high dividends, you can get out of excess returns, and on the premise of dividends, there is also a rise in stock prices, then the risk is not small.
The main reasons are as follows.
1. Stock price and dividends are different systems.
The market capitalization of a stock is the market capitalization, and dividends are dividends.
In fact, there is no inevitable relationship between stock price and dividends, and it is not a system.
The speculation of stocks, in fact, does not look at dividends, this is a naked reality.
The market will not desperately speculate on stocks because of high dividends.
Many dividends are high, and it is because the stock has fallen too much that the dividend yield is high.
Whether the dividend is high or not is just a start, the rise and fall of the stock price is still related to the market, and the funds will buy in this direction if they want to hedge the risk.
When the market opportunity is good, high dividends are naturally abandoned by the market, which is a seesaw.
Therefore, dividends are determined by listed companies, and stock prices are determined by the market, and there is no necessary connection between the two.
The decline in stock prices brought about by the market will not reduce your dividends.
And the amount of your dividends cannot determine the rise or fall of the stock price.
2. The dividend yield is no longer attractive.
As the stock price continues to rise, the dividend yield will actually slowly decline.
At 5 yuan, the dividend yield is 5%, and when it rises to 8 yuan, the dividend yield is only 3.125%.
Under the premise that the performance of listed companies has not increased significantly, the dividend yield in the direction of high dividends has actually declined.
It's just that the market's funds are still more sought after for the current dividend of about 4%.
But if in this direction, the stock price rises further and the dividend yield decreases again, it is difficult to say whether it is attractive or not.
When the market has fallen enough and a good investment opportunity arises, the dividend yield is also not worth mentioning.
Because it can rise by 5% in a day, why wait for a year's dividends?
The decrease in the dividend rate and the rise in the stock price will not last long, and there will definitely be a divergence in funds.
3. The performance growth of listed companies is slow.
The performance of listed companies has not been very good in the past two years.
It's not that the performance is necessarily declining, but the growth rate is very low.
Listed companies with high dividends are often large-capitalization enterprises, and in the case of unsatisfactory performance growth, dividends will not increase much.
When the dividend expectation is visible, the relationship between the fluctuation of the stock price and the dividend is very small.
The investment value of stocks with real high dividends lies in the fact that the listed companies are getting bigger and bigger, and the net profit is getting higher and higher, and the dividends will naturally be more.
The dividend yield is calculated based on the stock price and market value, but for investors who buy and hold for a long time, the total amount of dividends is the main issue that should be concerned.
4. There is a large amount of money to enter the layout at a low level.
The last point, which is actually very crucial, is that there are funds that want to enter the layout at a low level.
As for what kind of funds, everyone knows what they are.
At an all-time high, these funds will definitely not enter the market.
After all, they are not pick-up heroes, and there is no need to enter the market at this point to go long and give others a lift.
Moreover, in the long run, the essence of high dividends is that the price is low enough for the dividend yield to be high enough.
At this historical high, there is a 20-30% drawdown, and the dividend yield will be higher by 20-30%, which will be more attractive, and it is also an opportunity for these funds to be deployed.
In fact, the fourth point is very critical and the core of the problem.
After speculating in the direction of high dividends, it is very difficult to leave the large funds for subsequent entry.
Funds are very smart, and when they are hedging, they will enter the direction of high dividends in the short term.
But when the market has a chance, no one can afford a 4-5% dividend.
What's more, if the market value falls, the annual dividend will not make up for the floating loss at all.
High dividends are a false proposition, but only if you buy them at a low enough price to appear to have a high enough dividend yield.
Therefore, when the dividend yield is shrinking, the risk of retail investors deploying high dividends is gradually increasing.
Buying high dividends = buying wealth management seems to be true, but it is actually a false proposition.