With the third-quarter reports now fully released, the dividend sector has seen steady returns and increasingly prominent defensive characteristics, displaying strong overall performance, stable individual results, and ample dividends.

Analysts point out that companies in the dividend sector with strong earnings certainty and stable cash flows can provide predictable and steady returns, making their allocation value even more significant in the current volatile market environment.

The dividend sector's earnings performance is notably stronger. As of now, the 50 companies in the SSE Dividend 50 Index achieved combined operating revenue of 10.5 trillion yuan in the first three quarters, up 8% year on year, with total net profit of 1.84 trillion yuan, up 8.4% year on year. Compared with the Shanghai market's overall revenue and profit growth of 3.8% and 6.0%, their contribution to lifting overall performance is clearly significant.

Share price performance is supported by fundamentals and has been steady. Among the 50 dividend companies, 45 achieved revenue growth, and 35 of them recorded growth in both revenue and profit.

These 35 companies are concentrated in four major industries: banking, coal, transportation, and oil and petrochemicals, together accounting for more than 85%. The performance of these industries is supported by sector-specific logic.

For example, Shanghai-listed banks saw overall operating revenue and net profit attributable to parent companies rise 7.9% and 3.68% respectively in the first three quarters, both increasing. Industrial and Commercial Bank of China, Bank of China, China Construction Bank, and Agricultural Bank of China all achieved growth in both revenue and net profit.

The coal industry, benefiting from supply-side constraints and resilient thermal coal demand, has kept coal prices at a relatively high center. In the first three quarters of 2026, the 11 coal companies in the dividend sector together generated operating revenue of 666 billion yuan and net profit of 81.4 billion yuan, with abundant cash flow and strong dividend capacity.

Dividend yields are highly attractive. Constituent companies of the SSE Dividend Index implemented a cumulative cash dividend of 1.02 trillion yuan in 2025. Based on the closing price on November 2, 37 companies had a dividend yield above 3%, accounting for 74%; 22 companies had a dividend yield above 4%, accounting for 44%; and 10 companies had a dividend yield above 5%, accounting for 20%. The "fixed-income-like" attribute of dividend assets is becoming more prominent.

At the same time, the frequency and scale of listed company dividends are also increasing. In the first three quarters of 2026, 515 Shanghai-listed companies introduced interim dividend plans.

Enthusiasm for dividend assets is also reflected in recent ETF data. As of November 2, a total of 59 dividend ETFs were listed and traded on the Shanghai market, with a combined scale of 183.9 billion yuan, up 25% year on year, as dividend assets continued to attract capital.

Over the past three weeks, Shanghai-listed dividend ETFs have maintained net capital inflows, with cumulative net inflows of 8 billion yuan, demonstrating strong fundraising capacity.

The third-quarter fund reports for 2026 show that Shanghai-listed dividend ETF funds recorded combined profits of 20.3 billion yuan, with a weighted average excess return of 1.9%. The money-making effect of dividend products has emerged, providing relatively steady returns for holders.

Wu Ge, chief economist at Changjiang Securities and a director of the China Chief Economist Forum, said global technology narratives and geopolitics face uncertainty, and combined with disruptions such as the U.S. midterm elections, market risk appetite faces high volatility.

At year-end, the pace of domestic economic and policy activity is relatively moderate, while incremental policy and funding disbursement are still underway, with their effects likely to appear more in early next year. Prices excluding the impact of oil prices are still running at low levels, and the characteristic of dividend outperformance still appears obvious.

Dai Qing, chief strategy analyst at Changjiang Securities, believes that in terms of timing, the larger the gap between the dividend index yield and China government bond yields, the higher the equity-bond cost-performance ratio. Although dividend assets are not at an extremely undervalued level, over the long cycle, if bond yields fall further, the allocation value of dividends relative to bonds is expected to remain.

From a style perspective, dividends and growth show a "seesaw" phenomenon, and the odds for dividends relative to growth are still in a relatively high range.

China Securities Co. believes that since September, market style has gradually shifted from technology growth toward dividend defense, and the relative return advantage of dividend assets has expanded. Against the backdrop of high long-end overseas interest rates and the approaching third-quarter reports, it recommends centering on the idea of "defense first, counterattack when opportunities arise," using dividend sectors such as banking, utilities, and coal as the base position, and selecting varieties with stable dividends and good cash flow; on the growth side, opportunistically watch AI computing hardware directions such as PCB and optical modules.

Qian Yating, fund manager at China Europe Fund, said opportunities in the next stage are expected to spread to broad dividend stocks with potential high dividend capacity. Such companies with potential for high dividends often have high operating barriers, stable ROE, and abundant operating cash flow. These companies have the potential for sustained dividends in the future, while their valuations are at historically low levels.