From the perspective of investors’ actual returns, in the current environment of low interest rates on bank deposits, bank stocks remain attractive.
According to Wind data, as of the latest closing date of July 7th, within the past 12 months, about half of the 42 A-share listed banks have A dividend yield exceeding 4%. Among them, the dividend yields of China Minsheng Bank, China Everbright Bank, and Bank of Beijing reached 6.58%, 6.24%, and 6.08% respectively. The dividend yields of Industrial and Commercial Bank of China, Lanzhou Bank, China CITIC Bank and others all exceed 5%.
The continuous rise of bank stocks further provides support for the high dividend yield level. Specifically on the market, on July 4th, the banking sector reached a new high. On that day, individual stocks within the sector collectively performed well. Industrial and Commercial Bank of China, China CITIC Bank, Industrial Bank, and Shanghai Pudong Development Bank all broke through their historical highs, while Zheshang Bank, China Everbright Bank, Hua Xia Bank, and Bank of Suzhou all reached multi-year highs. On July 7th, bank stocks rose sharply but then fell back. By the close of trading, among the 42 bank stocks, 28 had risen.
When comparing the yields of bank deposits and wealth management products, Beijing Business Today reporters have found that after multiple rounds of cuts, the interest rate of long-term fixed deposits has dropped below the 2% mark, officially entering the “1” era. As a result, bank large-denomination certificates of deposit and notice deposits, which were once regarded as “high-interest” products, have also lost their interest rate advantages. The performance benchmark for low-risk wealth management products is around 2.5% to 3%. At present, the dividend yields of most bank stocks have significantly exceeded the return levels of bank deposits and wealth management products.
For investors, is it better to hold individual bank stocks or is it more appropriate to choose bank deposits and wealth management products? Industry insiders say that if the share prices of bank stocks remain stable, buying bank stocks to obtain dividend returns is indeed an investment strategy. However, it is necessary to pay attention to the essential differences between them and fixed-income products as well as the risk that stock price fluctuations may lead to “negative returns”. Investors need to make decisions based on their own risk preferences and the attributes of the products.
With the gradual economic recovery and the stabilization of monetary policy, the banking sector is expected to continue to maintain a stable and positive trend. Yu Fenghui stated that the high dividend yield has provided support for bank stocks, attracting a large number of investors seeking stable returns and becoming one of the important forces driving up stock prices. However, while investors are paying attention to the high dividend yields of bank stocks, they also need to be vigilant about potential risks, such as the possibility that macroeconomic fluctuations may lead to an increase in the non-performing loan ratio, thereby affecting the profitability and dividend levels of banks. In addition, changes in interest rates will also affect the net interest margin of banks, thereby indirectly influencing dividend distribution. Therefore, investors should comprehensively assess the fundamental situation of banks and avoid making investment decisions solely based on dividend yields.
