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As the semi-annual report disclosure draws to a close, the mid-term dividend situation of A-shares has essentially been revealed.

Wind data shows that as of August 31, the semi-annual report disclosure of A-share listed companies has come to an end. In this year's semi-annual reports, more than 670 companies have announced mid-term cash dividend plans or plans for 2024, involving a total dividend payout of nearly 530 billion yuan. The data indicates that the number of listed companies planning mid-term dividends has surpassed the total of the previous three years, and the total dividend payout has set a historical record.

Since 2023, the China Securities Regulatory Commission (CSRC) has been continuously encouraging dividends. In April 2024, the new "Nine Measures" were issued, further strengthening dividend regulation. Analysts point out that currently, the growth of capital expenditures of A-share companies has slowed down, and with the maintenance of a relatively good level of free cash flow, they have the capability to further improve the level of dividends. The dividend strategy still has medium and long-term investment value in macro logic, but the dividend yields of some traditional dividend sectors have declined.

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Nearly 530 billion yuan in mid-term dividends

Wind data shows that as of August 31, 672 A-share listed companies have announced mid-term cash dividend plans or plans for 2024, accounting for about 12.58%.

Compared with previous years, the enthusiasm for mid-term dividends by listed companies this year has significantly increased, with the cumulative number of companies planning dividends setting a historical high. Wind data shows that in the past three years (2021 to 2023), the number of A-share listed companies implementing mid-term dividends were 186, 138, and 194, respectively.

In terms of dividend amounts, as of August 31, this year's mid-term dividend amount reached 528.804 billion yuan, also setting a historical record. Wind data shows that in the past three years (2021 to 2023), the mid-term dividend amounts of A-shares were 104.32 billion yuan, 229.315 billion yuan, and 205.241 billion yuan, respectively.

Looking at the industry breakdown, banking, petroleum and petrochemicals, and telecommunications industries are the "main forces" of mid-term dividends. As of August 31, the mid-term dividend amounts of the banking, petroleum and petrochemicals, and telecommunications industries were 214.412 billion yuan, 93.426 billion yuan, and 71.243 billion yuan, respectively.

Specifically, in the banking industry, the mid-term dividend amounts of Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of China, and Bank of Communications are all above ten billion yuan.

The Industrial and Commercial Bank of China plans to distribute a dividend of 1.434 yuan (including tax) per 10 shares, with a total cash dividend payout of 51.109 billion yuan to ordinary shareholders, accounting for 30.0% of the net profit attributable to shareholders of the parent company.China Construction Bank plans to distribute a cash dividend of 49.252 billion yuan to all ordinary shareholders, with a cash dividend of 0.197 yuan per share (including tax), and a dividend payout ratio of 29.97%.

Agricultural Bank of China plans to distribute a cash dividend of 1.164 yuan per 10 shares (including tax) to ordinary shareholders, with a total dividend amount of 40.738 billion yuan (including tax), and a dividend payout ratio of 30.0%.

Bank of China plans to distribute a cash dividend of 1.208 yuan per 10 shares (pre-tax) for ordinary shares, with a total dividend payout amount of 35.562 billion yuan (pre-tax), accounting for approximately 30% of the net profit attributable to the parent company.

Bank of Communications plans to distribute a cash dividend of 0.182 yuan per share (including tax) to all shareholders, with a total planned cash dividend of 13.516 billion yuan (including tax), and a cash dividend payout ratio of 32.36%.

Based on these calculations, the mid-term dividend amount of the five state-owned major banks is approximately 190.177 billion yuan, accounting for 35.96% of the total mid-term dividend amount of A-shares.

In the petroleum and petrochemical industry, the three industry giants, PetroChina, CNOOC, and Sinopec, lead in mid-term dividends, with 40.265 billion yuan, 35.187 billion yuan, and 17.768 billion yuan, respectively.

In the telecommunications industry, China Mobile's dividend is 51.027 billion yuan, taking the first place; China Telecom's dividend is 15.291 billion yuan, and China Unicom's dividend is 3.05 billion yuan. According to China Mobile's announcement, from January to June 2024, the company's attributable profit to shareholders is 80.201 billion yuan, with a mid-term dividend payout ratio of 63.62%. The company stated that the proportion of profits distributed in cash for the full year of 2024 will further increase compared to 2023, continuing to create greater value for shareholders.

Several companies have introduced mid-term dividends for the first time.

Currently, mid-term dividends of several listed companies have been implemented, among which China Mobile, Zijin Mining, Goertek, and 22 other companies have completed their mid-term dividends. Companies like Yanjin Puzi, Heilan Home, and Zangge Mining, totaling 28 companies, are waiting to implement their mid-term dividends.

It is worth mentioning that among the listed companies that have released mid-term dividend plans or preliminary plans this year, there are several companies that are introducing mid-term dividend plans for the first time.Founders Securities recently announced its mid-term dividend plan, marking the first mid-term dividend since the company went public. The company plans to distribute a cash dividend of 0.48 yuan (including tax) per 10 shares, with the total cash dividend not exceeding 395 million yuan (including tax), representing a dividend payout ratio of approximately 29%.

Among the six major state-owned banks, Industrial and Commercial Bank of China, Agricultural Bank of China, and Bank of China are distributing mid-term dividends for the first time since their listings, while China Construction Bank and Bank of Communications are doing so after a hiatus of several years.

Postal Savings Bank of China stated in its semi-annual report that it intends to implement a mid-term dividend distribution for the fiscal year 2024, with the total mid-term dividends not exceeding 30% of the net profit attributable to the bank's shareholders as per the consolidated financial statements for the first half of 2024. The specific dividend plan has not yet been disclosed. If Postal Savings Bank of China carries out a semi-annual dividend distribution, it would also be the first mid-term dividend since its listing.

In the non-financial industry, companies such as Mindray Medical, China National Heavy Duty Truck, and Shanghai Energy are among the listed companies that are distributing dividends for the first time upon semi-annual report disclosure since their listings. Mindray Medical announced that it plans to distribute a cash dividend of 40.60 yuan (including tax) per 10 shares to all shareholders, with a total cash dividend expected to be approximately 4.923 billion yuan (including tax). China National Heavy Duty Truck plans to distribute a dividend of 0.66 yuan per share, with a dividend payout ratio reaching 55%, and an estimated total dividend payout of about 1.822 billion yuan. Shanghai Energy plans to distribute 2 yuan (including tax) per 10 shares, with an estimated total cash payout of 145 million yuan.

The dividend level of A-shares is expected to continue to improve.

The enthusiasm of listed companies in distributing mid-term dividends is related to the continuous guidance from regulators.

Recently, the Party Secretary and Chairman of the China Securities Regulatory Commission (CSRC), Wu Qing, held a special symposium in Beijing, where he had in-depth exchanges with representatives from 10 leading institutional investors, including the National Social Security Fund, insurance asset management, bank wealth management, and private equity funds, and fully listened to their opinions and suggestions. At the meeting, the participating units expressed that they would guide listed companies to increase dividends and repurchase efforts, and encourage listed companies to enhance investment value by comprehensively using mergers and acquisitions, equity incentives, and other methods.

On April 12th, the new "Nine National Policies" and a series of supporting rules from the exchanges were released for public comment, which made key arrangements for the dividend regulations of listed companies. In addition to guiding listed companies to strengthen dividends, improve dividend levels, and frequency, it also proposed to include companies that have not distributed dividends for many years or have a low dividend payout ratio under the "implementation of other risk warnings" (ST).

The sustainability of dividends depends on the company's free cash flow from equity and its willingness to distribute dividends. The willingness to distribute dividends further depends on the company's reinvestment plans and its desire to maintain liquidity. The sustainability of free cash flow from equity depends on the company's profitability. According to research by Industrial Securities, in recent years, as investment growth in some industries has slowed and corporate capital expenditures have contracted, the overall dividend payout ratio has increased from 30% to 41% in 2022. Especially since 2020, corporate free cash flow has remained at a high level, and the proportion of cash assets has reached a new high. At the same time, with the reduction of the risk-free interest rate, from a corporate finance perspective, the cost-effectiveness of using the company's excess liquidity for financial investments is also continuously decreasing.

Industrial Securities believes that with policy support, dividend-paying stocks may undergo a long-term revaluation, and the A-share and Hong Kong stock markets may usher in an era of dividends.Great Wall Securities Research points out that with the improvement of the stability of dividends across the entire A-share market, the dividend yield, and the proportion of dividends, the attractiveness of the entire A-share assets to long-term capital will also gradually improve. The release of future dividend plans will help improve the stability of company dividends and the ratio of dividends; as the number of companies issuing "Future Three-Year Shareholder Return Plans" continues to increase, the improvement of the stability of dividends across the entire A-share market and the overall increase in dividend yield may play a role in supporting the valuation level of A-shares, and the increase in the proportion of dividends across the entire A-share market will enhance the attractiveness of the entire A-share assets.