As the dawn of 2025 approaches, the Chinese stock market known as A-shares has entered a phase of continuous adjustmentUnlike this broader market trend, there is a notable exception: several stocks, particularly from the banking and highway sectors distinguished by their dividend payout history, have recently broken into new price territoryInstitutions such as Bank of China, Agricultural Bank of China, and Shanghai Bank have capitalized on this trend, alongside highway companies like Shen Guang High Speed, Shandong High Speed, and Wancai High Speed.

This resurgence of dividend-focused stocks has garnered considerable attention within the financial community, prompting debates about whether this will maintain the bullish sentiment seen throughout 2024 into the new yearRecently, reporters from Securities Times conducted interviews with several prominent asset management firms such as Hua Bao Fund, Invesco Great Wall Fund, DeBang Fund, Western Wealth Fund, and Da Cheng Fund to gain insights into the anticipated dividend investment strategies for 2025.

Many of the fund managers noted that the prevailing low-interest-rate environment, policies encouraging dividend distributions, and a growing demand for long-term investment from insurance and other capital sources are pivotal factors contributing to the renewed strength of dividend assets

They emphasized that the banks’ stock prices reaching new highs are an extension of the dividend investment ethos that began flourishing in 2024. Compared to some global financial instruments, Chinese financial stocks are still considered undervalued and present significant potential for recovery.

Moreover, the profitability and robust cash flow exhibited by publicly listed companies in the transportation sector, including railways, highways, and ports, bolster their attractiveness for investorsThese companies consistently maintain high dividend payouts, adding to their investment appealHowever, some fund managers caution that should the market warm up, growth-oriented stocks may outperform dividend-paying stocks.

Notably, several major banks have recently announced their mid-year dividend payouts for 2024. According to Wind data, the six largest banks, including Industrial and Commercial Bank of China, Agricultural Bank of China, and Bank of China, are set to distribute approximately 204.82 billion yuan in dividends for the mid-year period

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This represents over 80% of the total mid-year dividends declared by banks, spawning considerable enthusiasm in the marketConsequently, stocks for major banks like Chengdu Bank, Bank of China, Agricultural Bank of China, and Jiangsu Bank have consistently surged to new highs.

On January 2, 2025, Chengdu Bank's stock price rose to an intra-day peak of 17.49 yuan; similar trends were observed on December 25 of the previous year, when Bank of China, Agricultural Bank of China, and others saw their stock prices surpass previous highs ranging from 5.44 to 10.01 yuanThese developments indicate a renewed investor interest in the banking sector.

Several significant events further underscore the growing favor for bank stocks among investorsFor instance, on December 31, 2024, Ping An Life issued an announcement confirming that investments by Ping An Asset Management in Hong Kong-listed stocks of Industrial and Commercial Bank of China had crossed 15% of its total shares, triggering regulatory reporting obligations

Additionally, New Hope Chemical has augmented its holdings in Minsheng Bank's H-shares significantly, showcasing broader institutional interest.

Dividend funds are also crucial players in the bank stock sceneFor example, in the third quarter of the previous year, funds managed by Huatai-PB, such as the Huatai-PB Dividend Low Volatility ETF, held substantial stakes in Bank of China, while other major funds like Huitianfu's Value Selection Fund heavily invested in Agricultural Bank of ChinaSimilarly, several funds from Harvest Fund had significant holdings in Chengdu Bank, demonstrating the intertwining of dividend strategies with institutional investment decisions.

Considering a longer perspective, recent surges in bank stocks reflect a continuation of a theme that was dominant in 2024. As emphasized by fund managers like Yang Yang from Hua Bao Fund, the high dividend characteristic of bank stocks continues to draw attention due to their inflating valuations relative to their international counterparts.

In the transportation sector, further gains were seen as companies like Shen Guang High Speed and Shandong High Speed demonstrated solid profitability combined with consistent high dividend policies

These favorable attributes have led analysts to predict that transportation sector stocks will experience strong valuation recoveriesThe Central and State-Owned Enterprises (SOEs) in the transportation industry are identified as possessing substantial defensive characteristics due to their stable earnings and cash flow.

On January 2, stocks for Shen Guang High Speed, Shandong High Speed, and Wancai High Speed surged to historical highs, with increases since November of last year of 37%, 15%, and 21%, respectivelyThe CITIC Transportation Index also recorded a robust annual increase of 19.5%, outperforming the CSI 300 Index, further reiterating that dividend-focused defensive assets have once again captured market interest as the year comes to a close.

Notably, the stocks achieving new heights are favorites among renowned dividend fundsAccording to third-quarter reports, the Huatai-PB Dividend ETF, with its nearly 100 billion yuan in assets under management, is among the top ten shareholders in several high-speed companies including Shen Guang High Speed and Shandong High Speed, while Invesco Great Wall and other funds are positioning themselves similarly across this profitable segment.

Overall, the strong performance reported by dividend funds in the transportation sector highlights their alignment with key market trends

Through 2024, several top performing ETFs, such as E-fund's Dividend ETF and the Huatai-PB Dividend Low Volatility ETF, yielded returns reaching 22.64% and 19.65%, respectively.

This resilience is expected to enhance the appeal of dividend-paying assets, particularly amid expectations that low-interest rates will linger in the near futureFund managers are largely in agreement that the level of interest rates and the market’s risk appetite will significantly sway the performance of dividend assets over the coming yearsThey argue that continued investment in dividend assets within the A-share market will bear substantial long-term gains.

From 2017 to 2024, dividend assets have shown commendable performance; the China Securities Dividend Index's returns have exceeded many benchmark indices by substantial marginsCurrent rates indicate significant risk premiums for such assets compared to traditional government bonds, securing their place in the investment landscape

Furthermore, with the implementation of new policies aimed at fostering a culture of dividend distribution, the structural changes within the capital market drive increased investor interest in dividend-bearing stocks.

As firms like DeBang Fund noted, the recent swift declines in interest rates coupled with an asset scarcity in the market have led to an enhanced attractiveness for dividend-paying sectorsIn light of upcoming dividend distribution announcements, many investors are anticipating price appreciation ahead of record payouts, further adding to the momentum in favorable bank stocks.

Looking ahead into 2025, various asset managers have provided insights into which dividend assets might be worthy of considerationDazheng Fund has highlighted opportunities arising within sectors characterized by strong fundamentals and stable dividends, particularly in state-owned enterprises and the consumption sectors, which are expected to reclaim their footing as investors shift their focus toward value recovery and stable earnings.

In conclusion, the financial outlook heading into 2025 indicates a complex yet potentially prosperous path for dividend-paying stocks