The Dividend Insights series is finally here! As the tea steams, our first guest asks: "I knew dividend stocks were resilient in bear markets, but why are they still strong in a bull market? How do I pick them?" Let’s take our time to explore why dividend strategies remain viable even as the market climbs.
Since October, the A-share market has seen increased volatility. While the Shanghai Composite Index reclaimed the 4,000-point mark, rising volatility and shifting capital preferences have sparked concerns. Sector-wise, rotations between tech-growth and dividend-focused styles have emerged. Dividend assets, previously criticized for "missing the bull run," have regained momentum. Hong Kong-listed dividend stocks, with their higher yields and lower valuations, have demonstrated defensive yet offensive traits in choppy markets.
**Performance of Major Dividend Indices vs. Broad Market (Sept-Oct 2025)** Data shows traditional high-dividend, low-valuation sectors like banking, oil & petrochemicals, and utilities rebounded in October, with coal leading at an 11.06% monthly return. Dividend assets have anchored the market during the 4,000-point tug-of-war.
**Current Market Dynamics** While the index sits above 4,000, valuations remain below historical peaks, suggesting room for a sustained slow bull market. However, daily turnover has dropped significantly since Q3, narrowing the margin for error in momentum-driven strategies.
Smart investors are now adopting a "barbell strategy": balancing stable cash-flowing dividend assets (safety) with high-risk/high-reward tech-growth exposures.
**Why Trust Dividends in a Bull Market?** Long-term returns speak volumes. From 2021 to Nov 2025, the S&P HK Connect Low Vol Dividend Index surged 116.12%, outperforming the CSI 300 (-11.21%) and Hang Seng Index (-4.76%). Dividend indices also recover faster post-drawdowns.
Even during recent rallies (since Sept 24), the S&P China A Dividend Index rose over 40%, eclipsing the CSI 300 and Hang Seng with better drawdown control.
**Balanced Allocation Matters** Research shows hybrid strategies outperform in structural markets. Allocating to dividend assets as "ballast" enhances portfolio resilience without sacrificing growth potential.
**Top Dividend Picks Now** 1. **HK Dividends – HK Connect Dividend ETF (159220) [T+0]** - Tracks the S&P HK Connect Low Vol Dividend Index (5.72% yield), diversified across banks, telecom, and energy. - Benefits from valuation gaps, institutional inflows, and tax advantages.
2. **Smart Dividends – S&P China A Dividend ETF (562060)** - Focuses on the high-yield S&P China A Dividend Opportunities Index (13.26% annual return, 5.18% yield). - Emphasizes payout stability with capped single-stock weights (3%) and balanced market-cap exposure.
3. **Low-Vol Dividends – 800 Dividend Low Vol ETF (159355)** - Targets the CSI 800 Dividend Low Vol Index, blending yield with stability via utilities and consumer staples. - Quarterly dividend assessments enhance income predictability.
**Bottom Line** Above 4,000 points, dividend stocks offer upside from undervaluation and downside protection via yields. While markets are unpredictable, diversified exposure mitigates volatility risks across cycles.
That’s all for today’s dividend brew! We’ll delve deeper next time—stay tuned.
*Disclaimer: Past performance doesn’t guarantee future results. Investors should assess risk tolerance and consult fund documents before investing.*
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