As year-end approaches, market volatility has intensified, prompting investors to seek certainty, with dividend strategies gaining significant attention. Among these, a relatively understated approach—the state-owned enterprise (SOE) dividend strategy—has quietly delivered impressive long-term performance.

Data shows that the CSI SOE Dividend Total Return Index has outperformed this year, rising 11.08% despite a growth-oriented market environment, significantly surpassing the CSI Dividend Total Return Index (4.07%) over the same period.

**Why Does the "SOE + Dividend" Combo Excel Long-Term?**

Unlike typical dividend strategy indices, the CSI SOE Dividend Index stands out for its high "SOE purity." Its dual screening logic—high dividends and 100% SOE attributes—makes it well-suited to the current low-interest-rate environment and appealing from a thematic investment perspective. From the early "China Special Valuation" concept to the broader implementation of SOE market value management assessments, SOEs have emerged as a key long-term investment theme.

**Key Strengths of SOE Dividend Strategies**

1. **Economic Pillars in Industry Distribution** SOEs dominate sectors critical to national security and economic stability, such as banking and energy, which are known for mature business models and stable competition. The CSI SOE Dividend Index’s top three sectors (banking, energy, and construction) account for 48.6% of its weight, lower than the CSI Dividend Index’s 58%, reducing single-sector risk exposure.

2. **Robust Profitability** SOEs typically feature strong business franchises, stable operations, and healthy cash flows. From 2023 to Q3 2025, the index’s average return on equity (ROE) and net profit consistently outperformed broader A-shares and other major dividend indices.

3. **Leading Source of A-Share Dividends** In mid-2025, SOE Dividend Index constituents distributed RMB 392.3 billion in cash dividends, representing 57% of total A-share dividends—far exceeding other mainstream dividend indices.

**Why SOE Dividend Strategies Matter Now**

1. **Defensive Appeal in Low-Rate Environment** With China’s 10-year government bond yield at a historic low of 1.85%, the SOE Dividend Index’s 4.06% yield offers a 2.21% spread—higher than 55.87% of the past decade.

2. **Policy Tailwinds for Dividends** Recent State Council guidelines have institutionalized higher SOE dividend payouts. In mid-2025, listed SOEs (8.7% of A-shares) contributed 68% of total dividends, up 7% YoY.

3. **Attractive Valuations** The CSI SOE Index trades at a P/E of 12.33x and P/B of 1.16x—below historical medians—while the SOE Dividend Index’s P/E of 9.30x suggests room for re-rating versus peers.

**Conclusion** The "SOE + Dividend" strategy combines defensive attributes with SOEs’ fundamentals, balanced sector exposure, and growing payouts, offering unique long-term value. Investors may consider tools like the pioneering SOE Dividend ETF (561580) or its feeder funds (A-share: 020466; C-share: 020467).

**Risk Note**: Past performance does not guarantee future results. Investors should assess risk tolerance and review fund documents carefully. Index data provided by CSI Indices.