Huatai Securities: Middle East tensions disrupt market risk appetite; dividends still hold core position value

People’s Finance Network, April 3—In a research report, Huatai Securities said that in recent years, as global macro uncertainty has increased and demand from domestic residents for asset allocation has grown, along with the overall broad investment return rate’s central level stepping down for society as a whole, the dividend strategy has drawn increasing attention from capital. At present, dividend strategy valuations relative to growth are at a low level; disruptions from the situation in the Middle East are unsettling market risk appetite, but dividends still have value as a core holding. Huatai Securities optimizes the dividend strategy from two aspects: stock selection and timing. 1) From a stock selection perspective, based on dividend stability, earnings quality, and an industry-neutral optimization, it builds a Huatai strategy high-dividend industry-neutral portfolio. Based on free cash flow combined with growth and the relative strength factor of capital expenditures, it constructs a Huatai strategy free-cash-flow growth and stability portfolio. 2) From a timing perspective, it focuses on three types of excess return environments: a downside shift in risk appetite, an upside move in inflation, and a rising-volatility setting within a range-bound market. Combined with the Huatai quant timing model from the Huatai Quantitative Research team, it currently remains bullish on dividends.