Since the third quarter, the A-share dividend style has gained a relative advantage. In the first half of 2026, the A-share technology growth style benefited from high prosperity in areas such as the AI industry chain and advanced manufacturing, continuing its structural market. Since July, negative narratives around the global AI industry chain have increased, compounded by tightening expectations for overseas liquidity and rising uncertainty in Middle East geopolitics. The overall performance of the A-share market has been poor, industry rotation has accelerated, and the growth sectors that had previously performed strongly have undergone significant adjustments. As of October 9, the ChiNext Index and the STAR 50 had fallen 29.9% and 34.0% respectively from the end of June, while the CSI Dividend Index rose 11.5% over the same period, with defensive sectors such as coal, petroleum and petrochemicals, and banking performing relatively strongly (Chart 1). Year to date, the CSI Dividend Index has risen 1.8% cumulatively, second only to the STAR 50 (+8.4%) among major indices, and outperforming the Shanghai Composite Index (-3.9%) and the CSI 300 (-6.8%). Technology growth and dividend styles show a certain "seesaw" effect (Chart 2). Against the backdrop of increased volatility in the growth style and a decline in market risk appetite, the relative allocation value of dividend assets deserves renewed consideration.
Unlike the broad, trend-driven market of 2022 to the first half of 2024, the dividend style in recent years has been more phased and structural. From 2022 to the first half of 2024, the dividend style was one of the most persistent mainlines in both the A-share and Hong Kong stock markets. In our May 2023 report "How Can High-Dividend Investing Navigate Cycles in A-shares," we proposed that the resonance of three factors—scarcity of high-prosperity investment opportunities, a tight balance in stock market liquidity, and an "asset shortage" environment—was the main reason for the dividend strategy's advantage at that time. After the "924" market rally, the first two factors reversed. On the one hand, the AI industry chain's prosperity accelerated, and high-growth opportunities were no longer scarce; on the other hand, trading was active, and incremental capital continued to enter the market, forming a positive feedback loop with the wealth effect. Coupled with a recovery in risk appetite, the "asset shortage" logic weakened, and the relative attractiveness of the dividend style declined. However, the allocation logic for the dividend style has not ended. When external uncertainty rises, market risk appetite falls, or the growth mainline undergoes phased adjustments, dividend assets often demonstrate relative return advantages by virtue of relatively stable earnings and dividend returns as well as defensive attributes. For example, during the tariff policy disruption in April 2025, the US-Iran conflict in March 2026, and the period since July 2026 when AI industry chain expectations fluctuated and the growth style corrected, the dividend style all showed relative performance (Chart 3).
Long-Term Allocation Value and Phased Rebalancing Opportunities of the Dividend Style
From an asset allocation perspective, the long-term allocation logic for the dividend style still holds. The domestic low-interest-rate environment, long-term capital allocation demand, and the continuous improvement of listed companies' shareholder return mechanisms together constitute medium- to long-term support for high-quality dividend assets.
► Medium- to long-term capital continues to increase equity asset allocation, and new regulations on insurance asset-liability management reinforce demand for stable-yield allocation. At the policy level, insurance, pension, and other medium- to long-term capital are continuously guided into the market. Combined with yield demands under a low-interest-rate environment, insurance capital's equity allocation efforts are steadily increasing. As of the end of the second quarter of 2026, the total scale of insurance funds allocated to stocks and securities investment funds reached RMB 6.4 trillion, up 12.1% from the beginning of the year, accounting for 16.2% of the balance of funds utilized, with both scale and proportion hitting historical highs; among this, the stock allocation ratio has risen quarter-on-quarter for eight consecutive quarters [1]. Under the new accounting standards, fair value changes of FVOCI stocks are included in other comprehensive income and do not directly affect current net profit, while eligible dividend income can be included in current profit and loss, helping to balance long-term dividend returns with income statement stability and enhancing insurance capital's motivation to allocate high-dividend assets. The 2026 interim reports show that listed insurers generally increased FVOCI stock allocations, with the FVOCI share in stock portfolios rising by an average of 5.5 ppt from the beginning of the year to 46.3% [2]. At the same time, the August 2026 "Insurance Company Asset-Liability Management Measures" [3] further strengthened requirements for matching asset-liability costs and returns, explicitly requiring life insurance companies' net investment income coverage ratio to be no lower than 100%, which is expected to further enhance insurance capital's long-term allocation demand for stable-dividend equity assets.
► Improved dividend systems and better corporate cash flow are driving a steady increase in listed companies' dividend levels. Since 2023, policies have continuously strengthened the dividend orientation of listed companies. The "15th Five-Year Plan" outline further proposed improving the incentive and constraint mechanism for listed company dividends [4], promoting the development of dividend mechanisms toward normalization and institutionalization. According to disclosures at the September 2026 press conference of the State Council Information Office, since the new "National Nine Articles," listed companies have cumulatively paid dividends and conducted buybacks exceeding RMB 7 trillion, more than 2,000 companies have paid dividends for five consecutive years, and more than 1,000 companies have carried out interim dividends, with the frequency and amount of dividends continuing to increase [5]. In 2025, the total cash dividends of A-share listed companies reached RMB 2.4 trillion, and the overall dividend payout ratio rose to 44.9%, both hitting historical highs; in the 2026 interim period, implemented and proposed cash dividends totaled approximately RMB 720.9 billion, with the number and scale of dividend-paying companies continuing the relatively high level since 2024 (Chart 4). We believe that as listed companies' earnings quality and cash flow improve and the dividend incentive and constraint system continues to be refined, the overall dividend level of A-shares is expected to maintain a steady-to-higher trend.
► Under a low-interest-rate environment, the relative return advantage of equities over bonds remains prominent. As of October 9, the TTM dividend yield of the CSI Dividend Index was 4.24%, and the TTM dividend yield of the CSI 300 was 2.75%, both significantly higher than the 1.69% yield on 10-year government bonds (Charts 5 and 6). Against the backdrop of the domestic interest rate center remaining low, stable cash dividend assets still offer relatively good investment attractiveness compared with traditional low-risk assets such as bonds and deposits.
The relative allocation attractiveness of the dividend style has increased in the short to medium term. The three conditions that supported the dividend style's comprehensive advantage from 2022 to the first half of 2024—scarcity of high-prosperity investment opportunities, tight liquidity balance, and an "asset shortage" environment—have not fully reappeared, but increased volatility in high-growth opportunities and the recent marginal tightening of market risk appetite and liquidity may bring dividend allocation demand with greater persistence than in the past two years.
► The elasticity of macro aggregate recovery is limited, and earnings growth remains mainly driven by structural opportunities. The domestic economic fundamentals are recovering moderately, with exports and the AI industry chain maintaining high prosperity, but domestic demand and real estate remain relatively weak, and the breadth and elasticity of policy transmission and recovery still need to be observed. According to "Which Companies' Third-Quarter Reports May Be Better Than Their Interim Reports?", the overall A-share earnings growth rate in the third quarter may decline quarter-on-quarter, while upstream energy and raw materials and the TMT sector are expected to continue relatively high growth.
► Market risk appetite has declined in phases, and incremental capital has slowed. Although the long-term industrial trend of AI has not changed, recent market concerns have risen regarding the payback cycle of overseas capital expenditure, lower-than-expected ARR growth of major large-model vendors, and external restrictions in the optical module sector. Coupled with elevated valuations and relatively concentrated holdings in some popular tracks, short-term volatility in the growth sector has intensified. At the same time, expectations of tightening overseas liquidity and repeated Middle East geopolitical tensions continue to disturb global risk appetite, and A-share trading activity has marginally cooled. On the capital supply side, since July, the number of new A-share accounts and newly established equity fund shares have fallen significantly compared with the first half of the year, and the enthusiasm of incremental capital for entering the market has declined.
► Rising US Treasury yields increase valuation sensitivity, and dividend assets have historically shown a certain correlation with US Treasury yields. Our previous historical review [6] showed that the relative return of the A-share dividend style has a certain correlation with the trend of 10-year US Treasury yields (Chart 7). After US Treasury yields enter an upward cycle, the high-dividend strategy has a relatively high probability of achieving excess returns in the A-share market. Since July 2026, long-end US Treasury yields have continued to climb, and in early October, both 10-year and 30-year US Treasury yields hit new highs since 2002.
Outlook: The Barbell Allocation Structure of "Technology + Dividends" Is Expected to Receive Greater Attention
In "Can the High-Dividend Strategy Continue to Outperform?", we pointed out that the high-dividend strategy not only has defensive attributes when fundamentals weaken and the stock market corrects, but may also achieve phased relative returns through stable returns and value attributes when fundamentals recover slowly and the market trades in a range or rises slowly. Looking ahead, the medium-term industrial logic of technology growth still holds, but short-term uncertainty and valuation volatility may increase, and high-quality dividend assets are expected to provide another allocation consideration outside the growth mainline. On the one hand, the recovery of China's aggregate economy is relatively moderate, but areas such as AI hardware, computing infrastructure, semiconductors, and innovative drugs still have relatively independent industrial prosperity logic and earnings growth potential. At present, the overall A-share AI industry chain remains in a demand-driven benign expansion stage, and technology growth companies with core competitive advantages and the ability to realize earnings growth still have bottom-up allocation opportunities. However, the sustainability of overseas AI capital expenditure and commercialization returns remain uncertain. Coupled with rising overseas inflation pressure and liquidity tightening risks, the growth sector may face greater volatility in earnings expectations and valuations. On the other hand, against the backdrop of rising uncertainty in high-growth opportunities and greater fluctuations in market risk appetite, investors' attention to earnings certainty and stable cash flow is expected to increase. The domestic low-interest-rate environment, long-term capital allocation demand, and continuous improvement of dividend systems provide medium- to long-term support for high-quality dividend assets, which are expected to play a role in providing stable cash returns and buffering the risk of growth sector volatility. Overall, in an environment characterized by limited aggregate growth elasticity, structural high prosperity, and increased volatility in market risk appetite, the "technology + dividends" barbell structure is expected to become an allocation choice that balances earnings growth elasticity, shareholder cash returns, and portfolio stability. On the technology side, we suggest focusing on companies with clear industrial trends, long-term competitive advantages, and earnings realization capability; on the dividend side, focus on high-quality companies with stable earnings and cash flow, sustainable dividends, and reasonable valuations.
A-Share High-Dividend Stock Selection Portfolio Update
In 2025, total A-share corporate dividends continued to grow, but sector dividend conditions diverged. High-dividend investment should pay more attention to the earnings quality, cash flow generation capability, and dividend sustainability behind dividends. In our May 2023 report "How Can High-Dividend Investing Navigate Cycles in A-shares," we proposed an optimized stock selection approach based on "high-quality free cash flow, stable high dividends, and moderate dividend yields." This issue continues the above framework and updates the high-dividend stock selection portfolio based on the latest valuations, dividend yields, and earnings and asset quality data disclosed in the 2026 interim reports. For specific parameter settings, please refer to our previously published report "How Should the Dividend Style Be Allocated?" This issue selected 72 listed companies in total, and the updated results are shown in the original report for investors' reference.
From this issue's stock selection results, in addition to traditional high-dividend sectors such as finance, energy, and utilities, 1) Pan-consumer dividend assets remain an important source of high-quality high-dividend assets. Companies selected from food and beverage, home appliances, textiles and apparel, light industry manufacturing, and media and other pan-consumer dividend areas show strong continuity. These companies are mostly leading companies in mature stages, with certain channel and brand advantages, stable industry competition landscapes, and steady growth and cash flow. Companies selected in the pharmaceutical and biological field are mainly concentrated in subdirections with consumer attributes, such as branded traditional Chinese medicine, OTC, and pharmaceutical retail. These companies usually have relatively stable end demand, good profitability, and sustained dividend records. 2) Industrial manufacturing leaders are gradually entering the high-dividend investment horizon. More companies in industrial manufacturing fields such as automobiles, power equipment, and machinery equipment are meeting high-dividend screening criteria. As capacity cycles improve in some manufacturing segments and industry competition landscapes optimize, leading companies with advantages in technology, scale, and market competition are expected to improve profitability while also improving cash flow and capital expenditure structures, gradually releasing cash dividend potential and moving toward a shareholder return model of "earnings growth + stable dividends," enhancing the long-term allocation value of mature manufacturing leaders. 3) High-dividend characteristics are beginning to extend to the technology industry. In 2025, the cash dividend yield of the computer industry rose compared with 2024, and the dividend payout ratio also improved significantly. In 2026, listed companies in the computer industry began to enter the high-dividend portfolio. Some technology companies with strong cash generation capability, relatively controllable capital expenditure needs, and sustained dividend willingness have begun to show certain high-dividend investment characteristics and deserve continued attention.
Chart 1: Since July 2026, the dividend style has led gains, while the growth style has corrected sharply. Note: Data as of October 9, 2026. Source: Wind, CICC Research Department.
Chart 2: Year to date, dividend and technology styles have shown a certain "seesaw" effect. Note: Data as of October 9, 2026. Source: Wind, CICC Research Department.
Chart 3: Since July, the CSI Dividend Index has outperformed major broad-based indices. Note: Data as of October 9, 2026. Source: Wind, CICC Research Department.
Chart 4: The number and scale of interim dividend companies in 2026 continue the relatively high level since 2024. Note: 2026 data include implemented dividends and disclosed plans not yet implemented. Data as of October 9, 2026. Source: Wind, CICC Research Department.
Chart 5: The CSI Dividend yield has fallen back from the previous June high. Note: Data as of October 9, 2026. Source: Wind, CICC Research Department.
Chart 6: The dividend yield risk compensation of the CSI 300 and CSI 300 ex-financials has recently rebounded. Note: Data as of October 9, 2026. Source: Wind, CICC Research Department.
Chart 7: The relative return of the A-share dividend style has a certain correlation with the trend of the US 10-year Treasury yield. Note: Data as of October 9, 2026. Source: Wind, CICC Research Department.