In the ever-evolving landscape of finance and investment, the shift from rapid profit growth to a more sustainable approach marks a critical juncture for investorsAs economies transition towards high-quality development, significant changes in demographic cycles and leverage cycles are redefining capital trendsNo longer are investors merely fixated on accelerating profit margins; rather, there is a discernible move towards enhancing return on equity (ROE), sustainable profit growth, and stability—a trend that prioritizes dividend strategies.

Since 2021, the A-share market in China has exhibited relatively weak performance overallHowever, amidst this volatility, dividend stocks have emerged as a striking exception, consistently outperforming the marketOver the past three years, the China Securities Dividend Total Return Index surged approximately 30%, in stark contrast to the nearly 30% decline experienced by the CSI 300 Index

This staggering 60 percentage point advantage emphasizes the growing investor preference for companies that deliver reliable dividend payouts.

Since February, robust economic patterns have provided a significant boost to the A-share market, yet the advantages of the dividend index seem to have only strengthened, expanding its victories significantlyThe resilience of dividend stocks during downturns allows investors to not only sidestep periods of market languish but also to reap the benefits of upward market movementsTherefore, holding dividend stocks over the past three years proves not only to be a buffer during market slumps but also a profitable strategy as the landscape improves.

Several factors have catalyzed this shift towards dividend-paying stocksInvestors have increasingly recognized the value these stocks offer—insights into the continuity and sustainability of profits are driving demand

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In terms of valuation metrics, the dividend index remains within a reasonable range, suggesting room for continued interest despite past gains.

The current preference for dividend stocks recalls previous market behaviors, particularly the rise of the "Mao Index" from 2017 to 2020, which celebrated core assets significantly, yielding returns surpassing five-fold during its heydayHowever, compositions of these indices differ substantially; the "Mao Index" primarily encapsulated consumer segments such as food and beverage, biomedicine, and home appliances, while the current dividend index is largely dominated by sectors like banking, coal, and chemical energy.

Understanding this evolution necessitates a comparison with the prior core asset trend, revealing key characteristics of the dividend index's current prominence

The previous generation of core assets approximately divided into two stages: from 2017 to 2019, these assets largely exhibited growth characteristics; however, significant valuation escalations occurred in the subsequent year as macroeconomic factors shifted.

The flourishing of the Mao Index can be attributed to numerous external influences, including macroeconomic easing following the pandemic and the influx of new funds into the market that fostered a "herding" phenomenon among investorsThis led to substantial valuation increases, indicating an overarching pursuit of stable growth across both core and dividend assets, where stability translates into predictable returns.

Historically, each prolonged narrative in the A-share market reflects an underlying quest for growthThe period from 2002 to 2004, comprising the "Five Golden Flowers," illustrated explosive growth driven by rapid urbanization and an emerging real estate cycle

Similarly, from 2009 to 2012, the post-financial crisis stimulus propelled further growth in property markets, while from 2013 to 2015, investors clung to technology and e-commerce, which symbolized the next tech renaissance.

During phases of swift economic expansion, the prevailing strategy emphasized immediate profit maximization, akin to a hundred-meter dash where acceleration defines successThis rapid growth generated fertile grounds for both high-demand sectors and nascent enterprises as unfulfilled needs swiftly consumed new supplyHowever, the case of leveraging capital through high growth has begun to falter, evidenced by a drastic reduction in M2 growth rates which fell from an average of 18.5% between 2001 and 2010 to roughly 9.5% since 2016.

With the transition to mid-speed growth, core assets, exemplified by the Mao Index, aligned profit growth with consumption demands, balancing growth with reliable performance

As consumer expectations evolved and funding sources dwindled, reliance on pure growth strategies became increasingly untenableInvestors now prioritize profitability quality, demanding a shift from chasing mere scale expansion to maximizing the efficiency of capital utilization, a critical requirement for China's ongoing economic upgrade.

In this nascent environment, finding assets that embody speed and marginal change has grown complex, with ever-present risks associated with misplaced capitalThis shift in market dynamics reflects a changing focus, as stakeholders transition from prioritizing profit elasticity toward unfolding deeper ROE valueIncreasing emphasis on net asset fluctuations and quality growth suggests that dividend stocks, with their inherent stability, represent a refuge for investors fraught with economic uncertainty.

Long-standing conditions of liquidity excess have characterized the A-share market, providing easy capital access that encouraged high-risk pursuits without much caution

However, as economic challenges arise with new lending standards, the rarity of capital becomes apparent, necessitating a realignment towards prudent investment strategies that prioritize security and stable profitabilityMarket stories invariably embellish favored sectors; similarly, strategies focused on resource stocks hold appeal with grand narratives, yet the core of their attractiveness remains steadfast—high ROE, predictability, and resilience in uncertain times.

Despite fluctuating investor priorities, the enduring appeal of dividend stocks continues unabatedAs earnings per share (EPS) have stabilized or even decreased, the quest for high dividends remains alluring, satisfying an essential need for predictability within the complexities of modern economic frameworks.

Globally, numerous examples depict the effectiveness of dividend strategies in outperforming markets

Notably, James PO'Shaughnessy's research in "What Works on Wall Street" underscores the success of dividend strategies in U.Sequity markets, where high-dividend yield groups produced significant compounded returns between 1927 and 2009—a testament to the timeless appeal of dividends across varying socioeconomic landscapes.

Similarly, insights into Japan's market over the past three decades reveal a definitive correlation between high-dividend strategies and enduring performance, particularly as Japan grappled with post-bubble economic realitiesSince 1990, the total return of Japan's high-dividend strategy climbed over 209%, significantly surpassing broader indices and showcasing its resilience in challenging economic climates.

As China navigates its transition towards high-quality growth amidst demographic and leverage adjustments, the certainty of stable dividend returns solidifies itself as a reliable long-term investment approach, further embedding dividend stocks within the broader tapestry of economic evolution.