The author is an ordinary seventh-grade office worker with a liberal arts background and has 10 years of stock deposit experience. On the road of stock market investment, from the wandering car that was rushing onto the road in the past, it has gone through the stock market turbulence and transformed into a pilot car with its own GPS. After saving stocks for many years and achieving modest success, I truly feel that saving stocks is a sound investment with reasonable returns. The professional threshold is low and it takes less time. You only need to establish a correct mentality and simple operations to get started easily. It is very suitable for office workers who are busy every day and have limited salary.
Yuanta High Dividend (0056)
The time-honored high-dividend ETF has been on the market for 16 years. It has been around for many years and has gone through major negative events such as the financial tsunami, the European debt crisis, the US-China trade war, and the new crown epidemic. It is currently the high-dividend ETF with the most practical experience in the market, and this The yield rate has been 5~6% for several years, which is quite good.
The number of constituent stocks was originally 30, and will be increased to 50 from December 16, 2022, reducing the holding percentage of a single constituent stock. As for the performance after adding constituent stocks, it remains to be seen. Another major change is the announcement in May 2023 that the annual dividend distribution will be changed to quarterly dividend distribution, and the leveling fund mechanism will be included. It is estimated that starting from January 2024, the dividend distribution will be distributed evenly throughout the four seasons.
Buying this type of ETF focuses on receiving stable dividend cash flow. Earning the price difference is not the main purpose, so the price yield rate must be considered when buying. It’s just that in the second half of 2023, driven by AI component stocks, the price has repeatedly hit new highs, with the highest even soaring to 37.25 yuan. It is not appropriate to chase higher. If the price can return to 30 or 31 yuan, I will be willing to buy it.
Cathay Pacific Sustainable High Dividends (00878)
00878, established in July 2020, also focuses on high dividends, but it has more MSCI Taiwan Index constituent stocks than 0056, as well as two screening thresholds for ESG rating scores. It contains 30 constituent stocks and adopts quarterly dividend distribution. Like 0056, the price yield rate must be considered when buying. In addition, the price in the second half of 2023 will also hit new highs driven by AI constituent stocks, reaching a maximum of 22.89 yuan. It is also not advisable to chase higher. If the price can return to 18 or 19 yuan, I will continue to buy.
Should I deposit 0056 or 00878 in high-dividend ETFs?
Many fans and friends often ask Xiaoche: Which one should a novice choose when starting to save high-dividend ETFs? If you have money to invest now, should you buy 0056 or 00878?
If you are starting from scratch and can only squeeze out 10,000 to 20,000 yuan a month to save stocks, you might as well choose one of them for centralized deposit. After you have invested a certain amount of money, first gain a sense of accomplishment in terms of the number of shares and dividends, and then save the second tranche. If you have a large sum of money (more than 500,000 yuan) on hand to invest, it is recommended to save it in two targets.
At present, both grades of cars are available, with more 0056s and 00878s slowly increasing. Although both of them advertise high dividends, their “stock selection logic” and “component stock industry ratio” are different, so diversified holdings are more complementary to each other.
Stock selection logic is different
To put it simply, 0056 is to select the 50 stocks with the highest cash dividend yield “predicted for the next year” from the top 150 companies in Taiwan by market capitalization as constituent stocks. Since it is a prediction, there are heavy human intervention factors, which tests the manager’s stock selection vision, so the stock selection method is also bolder than 00878.
00878 selects stocks from the MSCI Taiwan Index constituent stocks with higher ESG rating scores and the top 30 stocks with “average annualized yield over the past three years” as constituent stocks. Two new rules will be added in the 2023 update. One is that companies that do not pay dividends in any year will be deleted directly. The second is to divide the past three years and the current year into four annual groups, and the bottom 10% of each group’s yield will also be eliminated. This way, you can avoid choosing cyclical stocks with unstable dividend policies.
Using the “average yield rate of the past three years” to select stocks means there is less human intervention and is relatively more stable. However, although the new rules can eliminate shipping stocks whose profits and stock prices fluctuate (such as Evergreen, Yang Ming), they cannot eliminate cyclical stocks that pay dividends every year but have fluctuating dividends (such as TCC, Nanya, China (Steel), as for the inclusion of stocks with excellent dividend distribution in the past three years, will it become a lagging indicator of cyclical stocks? It will take a few more years of observation before we can draw a conclusion.
Xiaoche believes that the stock selection logic of these two high-dividend ETFs is that one is bold and sprints, the other is steady and conservative, and holding at the same time can diversify risks.
Further reading:
0056, 00713, 00878… Under the income leveling fund mechanism, should the regular quota be reduced?Emily: I won’t change my stock deposit strategy because of this
I used my late husband’s passbook seal to claim the money but was refused. When I went to the IRS to declare, I found that the inheritance tax was over RMB 10 million! What should I do if I have an inheritance but don’t have enough cash and the inheritance cannot be touched?
Different industry allocation ratios for component stocks
As for the constituent stocks of these two high-dividend ETFs in the third quarter of 2023:
(Picture source: “ETF Experiment Notes for Stock Savers”)
0056 electronics-related industries have a heavier proportion, 12.28% more than 00878. However, in terms of the dispersion of the number of electronic stock stocks, since 0056 changed the constituent stocks from 30 to 50 at the end of 2022, reducing the holding ratio of each stock, 0056 electronics-related industries are dispersed to 32 companies in total, compared with 00878’s 15 There are many families. As for the financial industry, 00878 accounts for a large proportion, 13.92% more than 0056. Therefore, if the electronics industry is prosperous that year, the price of 0056 will prevail; on the other hand, if the financial profits are good that year, it will be beneficial to the dividend distribution of 00878.
In traditional industries (such as cement, plastics, steel, textiles), the ratio between the two is not much different, but 0056 is scattered in the 8th gear, and 00878 is only scattered in the 4th gear. In the event of a boom, the injury of the low-end thunder stock 00878 will be slightly serious. Other types of constituent stocks (such as 0056 construction stocks, department store stocks, and 00878 telecommunications stocks) have little impact because the proportion of both is not high.
Therefore, there are many differences between 0056 and 00878 in terms of stock selection logic and proportion of constituent stocks. There is no need to dwell on black or white when it comes to stock deposits. Only children make the choice. Adults can have both!
About the author_X car X stock deposit experiment
The moderator of the FB fan page “Small Car x Stock Saving Experiment” established a fan page in February 2021 to share the experience and growth of stock deposits. The cumulative number of followers so far exceeds 50,000. Articles have been published in “Today’s Weekly”, “Feng Media”, “Economic Daily”, “Business Times”, “Smart Financial Good Reading”, “Mirror Weekly”, “Weekly King CTWANT”, “Foresight”, “Financial News”, “Manager” and “World Magazine” Electronic media such as “Financial Weekly”, “Shangzhou Wealth Network”, “United News Network”, “Good Morning Lohas” and other electronic media reprinted and published it, and accepted interviews with “Money”, “Mirror Weekly” and “Youwo Zhi” paper magazines.
This article is excerpted from “Happiness Culture Publishing”ETF experiment notes for stock depositors》
2024-01-23 01:17:08
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