On June 26, CSI Dividend ETF (515080) announced its second dividend plan for 2024, which is also the fund's ninth dividend since its inception on November 28, 2019.
This means that CSI Dividend ETF (515080), as the only ETF among A-share ETFs that has continued to adhere to semi-annual dividends for three years from 2021 to 2023, has officially transformed into quarterly dividends.
Dividends, "eating interest", this is a new topic that will be booming in 2024. But for long-time readers of EarlETF, they should be familiar with the term "eaters". "Eating and breathing" is a technical job, and here I will share a summary of the "Eating Breath Guide", hoping to learn from you.
ETF is the first to pay dividends multiple times
Once upon a time, A-share ETFs did not pay dividends, or paid dividends at a low frequency.
In the history of the development of ETFs to increase the frequency of dividends, CSI Dividend ETF (515080) is an unavoidable target.
The author pulled up the dividend data in Wind's ETF data, and there are only 9 ETFs that can insist on stable annual dividends from 2021 to 2023. The CSI Dividend ETF (515080) is the only one that has adhered to the rhythm of dividends twice a year since 2021, which can be said to be the first to open up the trend.
Entering 2024, CSI Dividend ETF (515080) announced its first dividend of the year on March 22, with a dividend ratio of 1%. At that time, the author speculated that this ETF should be transformed into a quarterly dividend.
According to the latest announcement, CSI Dividend ETF (515080) will pay a dividend of 0.02 yuan per share on June 14, with a dividend ratio of 1.29%. Coupled with the March occasion, the cumulative dividend during the year was 0.035 yuan.
Five dates for dividends
ETF dividends, involving five dates. If you want to become a "eater", you need to have a basic understanding of these five dates.
Taking the dividend data of CSI Dividend ETF (515080) summarized by Wind as an example, the date involved is ❶ distribution base date; ❷ Announcement date; ❸ Record date; ❹ Ex-dividend date; ❺ Interest date.
❶ The distribution base date is the date on which the fund company calculates the relevant data, such as the dividend ratio, which is calculated based on the unit dividend and the net value of the day;
❷ The announcement date is the date when the fund house announces the dividend plan, and it is also the date when ETF holders can know the dividend plan. Of course, because the securities market announcement is generally launched on the exchange disclosure platform the night before the announcement date, it can be known a little earlier.
❸ The record date is the most important date for ETF holders who wish to enjoy dividends. Only holders of record on the record date can become the object of dividends.
❹ On the ex-dividend date, the price of the ETF on that day will deduct the dividend from the price, so if you see that the market price is lower than the previous day, don't think that it is a decline, it may just be an ex-dividend.
❺ Dividend date, which is the date when you can actually receive the dividend, which will be a few days later than the ex-dividend date.
How often dividends are distributed
Entering 2024, with the boom in dividend investment, high-frequency dividends of ETFs have become a new craze - and even monthly dividends are not uncommon, and the steps are not small.
How often is the best time to pay dividends?
This is a question that is destined to have no standard answer.
However, the author would like to remind you that although too high-frequency dividends can bring more high-frequency cash flow, dealing with this kind of cash flow is itself a "mental" burden.
For example, if you are an "interest-eater" and want to use dividends for living expenses, then you need to transfer the monthly dividends to the bank account once a month to the securities account. I don't deny that some investors are particularly happy with the process of transferring money out every month, but there are also many people who are tired of this kind of frequent repetitive work.
Of course, if you are optimistic about the long-term performance of the current A-shares, and plan to reinvest the dividends and buy back the dividends you receive back into the ETF, then the different frequency of dividends will bring significant differences.
For example, if a fund has a net value of 1 yuan and is expected to pay an annual dividend of 4.8%, according to the quarterly dividend, it is a quarterly dividend of 0.012 yuan. Please note that the minimum trading unit of ETF is 100 shares, which means that the dividends need to be fully reinvested, and you need to hold at least 8333.33 shares, but because the minimum holding unit of 100 shares is actually 8400 shares, which is 8400 yuan.
If the same annual dividend is 4.8%, according to the monthly dividend, the monthly dividend is 0.004 yuan, then you must hold at least 25,000 shares, which is 25,000 yuan.
The following table is a trial calculation of the minimum position "reinvested" by ETFs with different net worth under different dividend levels, which is for reference only:
Of course, this is not only the minimum holding unit, but it is also better to accumulate according to this amount every time you increase your position.
Therefore, how often to pay dividends also needs to be decided according to your own situation, and the higher the frequency, the better.
It should also be reminded here that ETF reinvestment involves a one-time purchase, so in order to reduce the cost of reinvestment, please ensure that your brokerage has a relatively low commission rate for ETFs (currently generally 1/10,000 level), and more importantly, do not have a minimum commission of 5 yuan, otherwise the actual commission rate will be abnormally high.
Of course, if you buy an ETF feeder fund and choose to reinvest dividends, you don't have this problem. The author notes that the feeder fund of the ETF in the article (Class A: 012643; Class C: 012644) has also started paying dividends this year, and has been implemented twice so far, seemingly in sync with the "quarterly dividend" pace of the underlying ETF. However, if you are optimistic about the future performance of A-shares and care about the proportion of dividends, then ETFs are a better choice.
Which is better, ETF or ETF connection?
Choosing an ETF that can only be bought with a stock account, or an over-the-counter fund that can be bought through a bank or a third-party platform of the fund, has always been the first choice for the people to consider.
In the author's opinion, ETFs have long been proven to be the best choice in the global market from the perspective of maximizing capital efficiency.
Here is a simple science popularization of the operation mechanism of over-the-counter and off-exchange funds.
ETF is an on-exchange fund, which adopts a physical (stock) subscription and redemption mechanism, so the fund manager of the ETF does not need to leave much cash to deal with the redemption, and the market value of the general stock can account for more than 99.5% of the net value of the fund, which is almost full.
The following table shows the stock position of CSI Dividend ETF (515080) in the last four quarters, which is very high.
But over-the-counter funds, including ETF feeder funds, are different. Because of the cash subscription and redemption mechanism, the fund manager must always maintain a cash or quasi-cash position of around 5%, which makes the ETF position held by the ETF feeder fund generally reach 95%. The chart below shows the position distribution of China Merchants CSI Dividend ETF Feeder A in the last four quarters. It should be reminded that because bonds have a leverage mechanism, it is not surprising that the following lines will add up to more than 100.
A position that is not high enough is a kind of loss for "food interest". At present, the dividend yield of CSI Dividend is around 5.8%, and if you hold CSI Dividend ETF, you can enjoy this level of dividend payment almost completely.
However, if you hold a feeder fund and the remaining 5% of your bond and deposit positions are 3% based on a 95% position, your dividend yield will drop to 5.66%.
Of course, this loss is not only reflected in dividend yields. If the net value of the ETF climbs by 10% due to the rise of the CSI Dividend Index, then the feeder fund that holds a 95% position in the ETF will only return 95%×10%+5%×3%=9.65%.
Therefore, if you are optimistic about dividends and price returns, ETFs are more capital-efficient carriers.
Using dividends as a "venture capital"
When it comes to the "food interest" of dividend investing, the two common schools are ❶ consumption flow and ❷ reinvestment flow. The former uses the dividends directly for consumption, while the latter buys the dividends back into the corresponding ETF itself.
But in fact, in addition to these two schools, there is also a venture capital stream that can also be considered.
Dividend assets, taking CSI dividends as an example, are generally relatively stable assets. So for many ordinary people, it is a good choice as the core of the position.
However, A-shares in addition to dividends are also very exciting and tempting.
For example, a hot topic among shareholders and the people recently is whether liquor stocks are in the end, and can the liquor fund LOF (161725) be bought?
For example, many Chinese concept stocks, science and technology innovation boards, or semiconductors and pharmaceuticals that are popular with the people, have many people who want to buy the bottom.
Therefore, when dealing with dividends similar to CSI Dividend ETF (515080), we can use the mentality of "risk investment" to buy some assets that you think are undervalued or particularly explosive, which is equivalent to a regular investment strategy that can be executed every quarter.
Do the band with a "food and breath" mentality
Although the "food interest" of dividend assets is mainly to obtain dividends corresponding to high dividend stocks.
However, for holders close to the market, in fact, you may as well use the mentality of "eating interest", sell high and buy low, close when you see a good situation, and do some fluctuations appropriately.
If you pay attention to the trend of CSI dividends, you will find that it tends to rise by 8-12%, and there will be a pullback, and there is rarely a market like growth stocks.
8-12%, in fact, is equivalent to 1.5 to 2 years of CSI dividend distribution level, if with a steady interest collection idea, after such an increase, referring to technical indicators or the author has been updating the 40-day return difference relative to Wind All A, it is not impossible to do high selling and low buying of small positions.
The following figure is the 40-day return spread chart that is familiar to old readers of EarlETF (for specific usage, please refer to the old article: An optimization of the 40-day return spread chart), carefully observe the black CSI dividend/Wind all-A ratio curve, and the red 40-day return spread, you will find that the red 40-day return spread curve often adjusts after breaking through 10%, and it is a good time to increase positions when it is lower than -5% or even -10%.
Of course, ETFs do swings, and liquidity is more critical. Among the several ETFs that track CSI dividends, the most active one is currently the CSI Dividend ETF (515080). The chart below is a comparison of the 20-day rolling daily average trading volume of these ETFs, which is for reference only.