As 2025 draws to a close, the global capital markets have undergone a deep reshuffling amid intense fluctuations. From the policy uncertainties triggered by Donald Trump's return to the White House at the beginning of the year, to the tariff disruptions impacting global trade in the middle of the year, and to the Fed's clear shift to an interest rate cut path in the second half, risk preferences have switched multiple times, and the market's main line has been repeatedly rewritten.

In this context, a clear trend in the Hong Kong stock market has gradually emerged: high-dividend assets have once again become a "safe haven" for funds in a volatile market. Stable dividends, valuation recovery, and stock price rebounds have resonated, leading to strong performances of several traditional industry leaders in 2025 with both "capital and dividends" gains.

Interest Rate Cut Environment Established, High Dividend Assets Become More Attractive

In mid-December, the Hong Kong Monetary Authority followed the Fed's lead and cut the benchmark interest rate for the third time this year, with the cumulative rate cut reaching 75 basis points. Amid this backdrop of lower interest rates, the attractiveness of cash assets has declined, while listed companies with stable dividend-paying abilities have seen their dividend yields become more favorable.

At the same time, the overall valuation of Hong Kong stocks remains at historically low levels. In sectors like finance, energy, real estate, and utilities, many leading companies continue to offer dividends above 5%, attracting long-term funds seeking stable returns.

From the perspective of index performance, the Hang Seng High Dividend Yield Index has significantly outperformed the broader market this year, not only showing defensive qualities in a volatile market but also releasing considerable capital gains potential during the market's recovery.

Top Performers in High Dividend Stocks: The Financial Sector Dominates

From the market performance up until mid-December, high-dividend Hong Kong stocks with the highest gains have been concentrated in large finance, energy, consumer, and real estate sectors, with the financial sector being particularly prominent.

Insurance and banking stocks have become the "core assets" of high dividend strategies. Among them, New China Life Insurance has surged nearly 150% this year, with a dividend yield of around 5.6%; Bank of China Hong Kong has risen about 68%, with a dividend yield exceeding 6%; CITIC Limited, CITIC Bank, and China Everbright Bank have gained between 30% and 40%, with dividend yields generally above 5%.

Aside from finance, the food and energy sectors have also contributed standout stocks. Food giant WH Group's stock price has risen nearly 81% this year, with its dividend yield once rising to over 12%, becoming a "dark horse" in the high dividend camp. Oil and gas state-owned enterprises have benefited from ample cash flow and increased dividend payouts, showing strong defensive qualities in the volatile market. PetroChina's stock price has risen more than 40%, with a dividend yield of around 6.4%;

In the real estate sector，some leading developers with strong balance sheets and relatively stable dividend policies have also performed well. Notably, quality real estate stocks such as Swire Properties and Henderson Land have gained between 30% and 40% this year, with dividend yields maintained at around 5% to 6%.

Overall, these stocks not only offer high dividend yields, but they also achieved substantial capital gains in 2025, showcasing the classic "dual benefit of dividends and capital appreciation."

Policy and Fund Dynamics Reinforce the Logic Behind Dividend Assets

The strength of high dividend assets is driven by more than just one factor. Throughout the year, regulators have released policy signals on multiple levels, encouraging long-term funds to enter the market and enhancing the dividend quality of listed companies. The demand from insurance funds, bank wealth management products, and institutional proprietary funds for high-dividend, low-volatility assets has continued to rise, providing a stable source of capital for Hong Kong's dividend stocks.

Since December, several financial institutions have disclosed their dividend payout plans, and a new round of dividend payments is entering its execution phase, further boosting market confidence in high-dividend strategies. For large market-cap companies with stable operations, particularly state-owned enterprises and central enterprises, the sustainability and predictability of dividends are gradually becoming a crucial component of their valuation framework.

High Dividends: Not Just "Defensive," But Also a Valuation Rebuild

Unlike in the past, when high-dividend assets were seen purely as "defensive tools," in 2025, they exhibit a characteristic of both "defensive + offensive." On the one hand, stable dividends provide cash flow buffers for investment portfolios; on the other hand, stock price recovery from a low valuation starting point offers considerable capital gains potential.

Especially in the context of global economic slowdown and increased volatility of risk assets, the market's emphasis on "earnings certainty" has grown, opening new opportunities for a revaluation of dividend assets.

Outlook for 2026: Dividend Strategies Still Hold Long-Term Value

Looking ahead to 2026, institutional investors generally believe that high dividend strategies still hold long-term value. On one hand, the implementation of new accounting standards is expected to further boost the demand from insurance funds for high-dividend stocks. On the other hand, in the context of an unclear credit cycle recovery, dividend assets can still serve as a "stabilizing anchor" in investment portfolios.

From a cross-market perspective, the overall dividend yield of Hong Kong stocks is still higher than that of A-shares, offering structural advantages for institutional funds not affected by dividend taxes. At the same time, the market is gradually realizing that high dividends are not simply "static income" but are closely related to corporate governance, cash flow quality, and long-term return ability.

While chasing growth and thematic investments, high-quality companies with stable dividends and reasonable valuations may still be an important choice for navigating through the cycle.