Summary of Key Points
More than two years since the implementation of the new "National Nine Measures," cash dividends from A-share listed companies have seen both an increase in volume and quality: annual dividends have exceeded 2.5 trillion yuan, with over 2,898 companies distributing dividends for three consecutive years. There are significant differences in dividend practices across industries (traditional sectors like food and beverage, coal are generous, while real estate is more stingy). The proportion of mid-year dividends has risen from 11.5% to 34.4%. Regulators are both encouraging companies to distribute dividends and overseeing them to prevent them from depleting their own funds. The market has also discussed issues such as the balance between dividend distribution and company growth, as well as whether high debt levels allow for dividend payments. Overall, however, dividend distribution is becoming a more common practice among companies.
Detailed Analysis
1. A Surge in Dividend Volume: From Thrifty Companies to Generous Payments
In the past year, the total cash dividends distributed by A-share listed companies surpassed 2.5 trillion yuan, equivalent to nearly 10 billion yuan being given to investors each trading day. The number of companies distributing dividends for three consecutive years has increased significantly, reaching 2,898, up from before the new "National Nine Measures." The Shanghai Stock Exchange announced dividends totaling 1.82 trillion yuan in 2025, a year-on-year increase of 2.8%. The dividend yield (dividends/stock price) for the SSE 50 index reached 3.3%, meaning that investing in SSE 50 stocks could generate a 3.3% annual return just from dividends, which is higher than many bank investments.
More importantly, dividends are playing an increasingly significant role in investment returns: over the past three years, more than one-third of the returns from the CSI 300 index came from dividends; in the past five years, dividends even made up for any losses in stock prices, resulting in positive returns for investors.
2. Varying Dividend Practices by Industry
There is a stark difference in dividend policies among industries, depending on their financial capabilities and growth needs:
- Generous Dividends: Industries such as food and beverage (83.9%), coal (63.5%), telecommunications (64%), and home appliances (60.4%) are more generous with dividends. For example, Moutai, a liquor company with substantial cash flow from sales, can afford to distribute over 80% of its profits as dividends because it does not need to invest heavily in new facilities.
- Moderate Dividends: Industries like pharmaceuticals and biotechnology (48.1%) and power equipment (40.6%) retain a portion of their earnings for research and development or equipment purchases before distributing dividends to shareholders.
- Stingy Dividends: Real estate (14.2%) and construction decoration (28.1%) are less generous due to high debt levels and declining performance, leaving them with limited funds for dividends.
3. Regulatory Guidance: Encouraging and Regulating Dividends
Regulators are not adopting a one-size-fits-all approach but are using a combination of measures:
- Encouraging Dividends: They restrict major shareholders from selling shares and issue warnings to companies that have not distributed dividends for years or distribute very little. For companies with good dividend records, they encourage multiple dividend payments per year (e.g., semi-annual) and advance announcements of dividends.
- Regulating Dividends: They monitor companies with high debt levels (over 80%) to ensure they have enough funds to repay debts and those that distribute more than 100% of their annual profits or more than 50% of their accumulated undistributed earnings, requiring explanations for such distributions.
4. Market Debate: The Appeal of Dividends
The market has ongoing discussions about the value of dividends, but the core principle is that it depends on the company's specific circumstances:
- Growth vs. Dividends: Some argue that retaining funds for growth is better, while others believe that distributing cash is more beneficial. For tech companies that need to invest in research and development, lower dividend payments are acceptable; traditional industries with limited growth potential may be more justified in distributing higher dividends.
- High Debt and Dividends: It's not absolute; state-owned enterprises with good credit ratings can distribute dividends even with high debt levels if they don't need to retain cash for short-term obligations. However, companies with high debt and no cash flow cannot afford to distribute large dividends.
- Impact on Major Shareholders: Some worry that major shareholders may exploit dividend payments to deplete company assets. However, calculations show that if a company's market value is five times its net assets and the major shareholder holds 50% of the shares, a 200 million yuan dividend would result in a 1 billion yuan reduction in the company's market value, reducing the shareholder's wealth by the same amount. Rational major shareholders would avoid this.
5. Mid-Year Dividends Becoming the New Norm
Since the new "National Nine Measures," the proportion of mid-year dividends has increased from 11.5% to 34.4%. Investors can now receive a portion of their annual dividend earlier, improving capital turnover. For example, China Mobile distributed nearly 2 billion yuan to A-share investors in its mid-year report in 2025.
Conclusion
The new "National Nine Measures" have made dividend distribution a standard practice for A-share companies. However, the amount of dividends is not the only factor; it must be appropriate, providing returns to investors without affecting the company's healthy financial growth. In the future, dividend policies will become more market-driven, with different industries and companies adopting varying strategies. Clear and consistent dividend policies will be key in attracting investors.