How should investors look for treasure in high-yield stocks?

Views 19282024.05.30

In addition to the warming of technology stocks, it is also worth paying attention to the mention of Chinese stocks in February this year (Hong Kong stocks perform well after the year). It's been more unexpected lately.”Mainlanders may consider a reduction in dividend tax” The news, which greatly improved the high yield stocks, $Hang Seng High Dividend Yield Index(800754.HK)$Significantly increased today. $Hang Seng Index(800000.HK)$Closer to the 19000 point barrier. This article will help investors understand how the dividend tax relief for Mainland investors can boost share prices.

Simple understanding of large line model calculations

High-yield stocks were sought after, and today's stock tax break rumors led to a surge in the share price, mainly because the move will change the way the company calculates the pricing of its target price. The model used by institutional investors for ordinary high-yield dividends, or value stocks, generally does not depart from the DCF (Discounted Cash Flow Cash Flow Discounting Method or DDM (Dividend Discount Model). THE REASON FOR THE SPIKE IN HIGH YIELDS IS A CHANGE IN THE WAY DDM IS CALCULATED. HERE IS THE WIKI ABOUT DDM RELATED TO ~.



Finally, it is possible to clearly understand the hype logic of the current investment market from the model calculation method. Draw a conclusion in the last equation.

It can be seen simply from this model that the present value of the stock price and the dividend are related, so when the dividend tax is deducted, the future dividends calculated by the model increase, which simply raises the target price of the entire company. Therefore, this dividend tax cut will be the most direct way to boost the performance of higher dividends.

Investment insights from the model

The authors pulled out the equation not to learn how to sell, but wanted investors to understand the logic behind investing in high-yield stocks. Institutional investors, in addition to their focus on future dividends, are the permanent growth rate of dividends (g) and the company's cost of equity (r).

THE COST OF EQUITY WILL FALL AS RISK-FREE INTEREST RATES FALL, A KEY FACTOR DRIVING THE EARLY HIGHER YIELDS TO LEAD THE RISE. We now judge that the most important thing for a stock price movement is the expectation of a permanent growth rate in dividends.

As a result, some high-yield stocks with a stable dividend policy have overtaken the market a lot in the past year, e.g. $CHINA MOBILE(00941.HK)$ $CNOOC(00883.HK)$ $CHINA SHENHUA(01088.HK)$$AIA(01299.HK)$It is also due to the earlier announcement of a clear dividend policy, which has led to share price movements. In addition, as a result of the national corporate reform, some companies with low dividends are also likely to begin to change significantly with the environment, e.g. $Seikitokyu Kogyo(1898.JP)$ $JIANGXI COPPER(00358.HK)$ $PETROCHINA(00857.HK)$.

How to choose a high yield stock when there is no supply

What investors should pay attention to when buying high-yield stocks at the moment is that they consider the sensitivity of high yields and the grandiose economy. The higher the sensitivity, the higher the risk, but there will be an incentive to follow, after all, the market's view of the Mainland economy has only begun to change since mid-April. If the overall macroeconomic environment improves, the company's dividend capacity and growth momentum will greatly increase valuation levels.

Here are the different risk assessments in the high-yield stock series~

Low risk


Power Stocks ~ Industry Preferred $CHINA RES POWER(00836.HK)$

China Risk

Domestic Banking Industry Preferred $CCB(00939.HK)$

Energy Stocks Industry Preferred $PETROCHINA(00857.HK)$ $CHINA COAL(01898.HK)$

High risk

The preferred choice of the domestic insurance industry $CPIC(02601.HK)$

Cement Stock Industry Preferred $CONCH CEMENT(00914.HK)$

Based on the sensitivity of the industry and the prospect economy, investors need to understand their ability to make judgments based on the sensitivity of the industry and the prospect economy. If you want to find more about stocks with high shares, you can use the following function to find shares on Futubull.

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