We believe other conditions are becoming even more favourable for dividend-focused investors. These include ongoing policy measures to improve returns on equity (ROE), payout ratios and overall shareholder returns and supportive long-term structural trends that should boost demand for dividend stocks. Collectively, these should provide strong support for dividend-driven investing in China now and in the decades ahead.
Successful investing in China has been about more than harnessing growth. Historically, dividend-paying stocks in the A-share market have outperformed their broader peers, making a dividend-focused investment strategy superior (see Figure 1).
The appeal of China’s dividend stocks will likely remain, given the country’s low interest rate environment, which has resulted in low yields from bank deposits and bonds. Interest rates are also expected to decline and remain low for the foreseeable future, which should boost further the appeal of dividend stocks.
