The dividend-focused sector continues to strengthen.

Amid unfavorable external conditions, major A-share indices demonstrated resilience in early trading today (November 12), with the Shanghai Composite Index briefly surpassing 4,020 points, approaching its previous high.

The cyclical dividend sector bolstered the market, with home appliances, oil & petrochemicals, and banking sectors rising over 1%, while food & beverages and non-bank financial sectors also gained. Among heavyweight stocks, PetroChina's A and H shares surged, with the H-share price hitting a new high since 2008. Agricultural Bank of China's A-share also climbed significantly, reaching a record high intraday.

Recently, the A-share market has shown a clear preference for dividend stocks, as evidenced by the strong performance of PetroChina and Agricultural Bank of China. Sector-wise, oil & petrochemicals, banking, and coal have led gains among Shenwan's primary industries since November, while tech sectors like computers and electronics have notably retreated.

Looking ahead, with the AI narrative weakening and the impact of new mutual fund regulations, dividend sectors are likely to continue outperforming the market in the near term.

**Agricultural Bank of China Hits Record High** Extending its recent strength, Agricultural Bank of China's A-share rose sharply in early trading, reaching an intraday high of 8.65 yuan per share, setting another record. Its H-share also surged over 2%, hitting a new peak. The banking sector as a whole stood out, gaining over 1%, with Industrial and Commercial Bank of China's A-share also reaching a historic high.

PetroChina and other major blue-chips also saw significant moves. Driven by large-cap stocks, dividend sectors like oil & petrochemicals and banking advanced notably in early trading. Since November, dividend sectors have significantly outperformed tech stocks.

Pacific Securities noted that while tech stocks still attract high capital inflows (above 35%), the time and space for a correction remain insufficient (historically taking about a quarter since 2023). For the fourth quarter, low-volatility "old economy" sectors are more likely to deliver excess returns compared to high-volatility tech stocks.

**Low-Position High-Quality Stocks Identified** Industry experts attribute the rise of Agricultural Bank of China and PetroChina to their stable and attractive dividend prospects. Investors may consider undervalued dividend stocks with similar potential.

According to a screening based on criteria such as over 10 analyst ratings, year-to-date price declines, 2024 dividend yields above 3%, and 2024 ROE exceeding 10%, 47 stocks emerged.

In terms of dividend yield, Fuanna leads with over 8%, followed by Gree Electric, Sophia, and Chow Tai Seng, all above 7%. Yanghe Brewery, Heilan Home, and De Rucci also offer yields above 6%.

From an institutional perspective, Kweichow Moutai tops the list with 48 analyst ratings, followed by Wuliangye, Tsingtao Brewery, and Mindray Medical, each with over 30 ratings.

Some companies are expected to sustain high dividends. Kweichow Moutai plans to distribute at least 75% of its annual net profit as cash dividends from 2024 to 2026, split into mid-year and year-end payouts. Gan Yuan Foods aims to distribute no less than 70% of distributable profits annually, adjusting to 50% if major investments arise.

**11 Stocks Heavily Held by Social Security and Insurance Funds** Among the 47 stocks, 10 show over 30% upside to consensus target prices, including Dong-E-E-Jiao, Lao Feng Xiang, Mindray Medical, Heilan Home, and Yealink Network.

Notably, 11 high-dividend stocks are jointly heavily held by social security and insurance funds, such as Lao Bai Gan Liquor, CNOOC Development, and Bull Group.

For example, Weixing Textile sees over 8% combined holdings by these funds, while Anjoy Foods, Transsion Holdings, and Chongqing Brewery each exceed 3%. Fuanna, Chow Tai Seng, Huili Group, and Sophia also have over 2% combined holdings.

Among these 11 stocks, seven offer over 20% upside to target prices: Transsion Holdings, Chow Tai Seng, Bull Group, Anjoy Foods, Lao Bai Gan Liquor, Sophia, and Weixing Textile.