Dividend Stocks 2024｜How to Use High-Yield Hong Kong Stocks to Support Retirement?

The US rate cut cycle has officially started,TAM CHILOK, CHIEF ANALYST AT FUTUAN SECURITIES BELIEVES: “The US interest rate cut leads to a narrowing of the China-US interest rate gap, which is undoubtedly a positive factor for Chinese assets. However, as the current economic situation remains weak, uncertainty in the consumer market, coupled with the impact of real estate, makes it difficult for major stock market indices such as the Hang Seng Index to start too big in the short term. Many times investors need to look for alpha from the fundamentals of individual companies, but the process is hard and painful.

If you want to invest from the idea of reducing interest rates, there is also a more comfortable way to invest is to invest in some high-quality high-yield dividends as an object of interest. The goal is to make a profit and a profit.”

For those who lose active income after retirement, a stable passive income can provide you with ample cash flow to help support your retirement life! And investing in stocks with relatively stable yields or is one option for you to increase passive income. Today we will introduce you to the dividend stocks of Hong Kong stocks.

What is Dividend Shares?

INVESTMENT INCOME SHARES (I.E. DIVIDEND SHARES) ARE SHARES OF COMPANIES THAT REGULARLY DISTRIBUTE DIVIDENDS TO SHAREHOLDERS. Therefore, dividend stocks are generally companies with stable business. The good side is that it provides stable dividend income; but the bad side is that it limits the growth potential of the stock. What are the advantages and disadvantages of dividend stocks?

What are the advantages of dividend stocks?

• Stable sources of income: Companies with dividend shares receive stable dividends from companies with stable profitability. If the company continues to generate stable profits, investors can maintain an appropriate source of income.

• Long-term value retention and value-added potential: Dividend stocks are generally more mature and stable companies whose share price volatility is relatively small. They have the opportunity to increase dividends when profits grow, thereby driving share price increases and capital appreciation.

• Combating market volatility: Because investors have a certain demand for dividends, the price volatility of dividend stocks is often lower, making them effective in resisting market downturns.

What to look out for in investment income stocks?

• Dividend not guaranteed: Even if the company manages to stabilize dividends, the amount of dividends distributed cannot be guaranteed. WHEN COMPANIES REDUCE OR STOP DISTRIBUTING DIVIDENDS DUE TO ECONOMIC DOWNTURNS OR DECLINING PROFITS, THERE IS AN OPPORTUNITY TO AFFECT INVESTOR EARNINGS.

• Limited growth potential: Companies with dividend stocks are more mature, in other words, their growth potential is relatively limited.

STABLE DIVIDENDS: STABLE DIVIDENDS FOR 10 YEARS ON 4 DOMESTIC SILVER STOCKS

Inland treasury stockIt is popular among many income stocks because bank stocks generally have a stable source of income, diversified financial operations, good financial performance, and better risk resistance. The Bank of China (03988), Jiao Tao Bank (03328), Construction Bank (00939) and Industrial and Commercial Bank (01398) maintained stable dividends for 10 years*.

What are the yield options for international bank stocks?

Investment in international bank stocks can also provide stable dividend income, such as Hang Seng Bank (0011), Standard Chartered Group (2888),HSBC (0005)

Low Threshold Income Stocks: Utilities

Utilities Stocks refers to stocks of companies that provide public services such as electricity, gas, water and other infrastructure such as Hong Kong Light, China Gas, etc. Since the above services are essential for the public on a daily basis, the demand does not change fundamentally due to the economic cycle and is relatively stable. While the entry threshold for utilities is generally lower, you can get started with at least $3,000!

High-yielding Income Stocks: Hong Kong Property Trust

Real estate is an emerging industry in Hong Kong and, as required by the Securities and Exchange Commission, real estate trust funds (REITs) are required to distribute at least 9 per cent of income as dividends to investors for higher returns.

Other Income Options: Dividend Funds

Dividend funds usually pay interest to investors on a regular basis (such as quarterly or annually). Investors can choose to have dividends paid directly in cash to them, or they can choose to reinvest the dividends into the fund to buy more fund shares. In general, dividend funds are mostly based on stock and bond funds.

Must high interest rates be good? How to calculate a good quality high yield?

A high dividend does not mean a good thing, and there is always the opportunity to earn a price erosion. In addition to referencing the dividend rate, the following 7 guidelines need to be considered:

1. Is it possible to pay dividends on a continuous basis?

A good dividend stock should have a stable dividend history, and it is best to be able to deliver dividends continuously over the past few years without interruptions or reductions.

2. Have a healthy financial situation: stable profits and low debt levels

Find out if the company's financial condition is healthy, see if its profits are stable and whether it maintains a low level of debt.

If profits are stable, it means that the company will be able to distribute dividends on a continuous basis; low debt levels mean that the company's financial burden will not be too heavy and affect the company's ability to pay dividends.

3. Whether there is sufficient cash flow

Having ample cash flow means the company has the ability to pay dividends.

4th. Is there any potential for dividend growth

In addition to seeing whether there is a stable dividend, look at whether there is a stable dividend growth. Sustained dividend growth can help fight inflation and improve real returns.

5. Industry and market position

Dividends for such dividend stocks are relatively stable if industry needs to be stable; and it is easier for companies with competitive advantages in the market to maintain stable earnings and dividend payments.

6. Whether the shareholder return policy is transparent and reasonable

It is possible to observe whether the company's return policy to shareholders, such as dividend payout ratios, is transparent. If so, investors will start with more confidence.

7. Is there a risk aversion to the economy

Good yielding stocks should be able to maintain relatively stable earnings and dividend payments during economic downturns or market volatility.

How to Buy High-Rise HKEx Stocks on Futu

1. Head over to Futubull and sign up for a new account.(Register now)

2. Trade simply by opening a comprehensive account and depositing funds. Click below to open a new customer to enjoy welcome rewards of up to $1,000!

1. Click [Markets] > [Hong Kong Stocks] to find a list of high dividend yields to find the highest yield Hong Kong stocks.

2. Enter the face value you want to buy and the expected purchase price, and you can place an order based on the Reference Selling Price. (This price is a “reference price” only, and the actual executable transaction price may have an exit with it.)

3. Click [Buy] - Enter the transaction password and wait patiently for the transaction to be concluded after the order has been successfully submitted, and the transaction price will not exceed the order price.

* Source: Economic Week