ETF Income Strategy: Comprehensive Comparison of Four High-Dividend ETFs!

The average annual inflation rate in Hong Kong over the past decade has been 2%. In such an inflationary environment, if investors take no action and simply keep their funds in the bank, particularly in low-interest fixed deposits, their personal financial situation will automatically shrink, and the real purchasing power of their funds will gradually decline over time.

Currently, the market widely expects that the United States may cut interest rates twice before the end of the year. As a result, Hong Kong interest rates may also follow suit. In this context, even the interest rates on bank fixed deposits may not be sufficient to cope with inflation. For certain types of investors, there are clear investment needs. For instance, investors who wish to pursue conservative investments and obtain passive income, or those over the age of forty who seek to earn an additional few thousand dollars monthly with low risk. For these investors' needs, high-dividend ETFs in the Hong Kong stock market may be the 'income-generating tool' they have been searching for.

Before delving into the high-dividend ETFs, there is noteworthy news regarding investment services:

Futu has established eight physical stores throughout Hong Kong, with its largest flagship store recently opened in Causeway Bay. This new store features several highlights, including the introduction of a 'Private Wealth Center' that offers investors more personalized and professional wealth management services; it has also added appointment consultation services to facilitate in-depth communication between investors and professionals according to their schedules and needs. Additionally, Futu has launched an 'Investment Newcomer App Operation Class', providing various investment services tailored to the needs of different investors, helping novice investors better adapt to the market environment. In the opening month, Futu rolled out a series of limited-time promotional activities, including gifts for new account openings and personalized engraving services; investors who complete tasks also have the opportunity to win exquisite merchandise related to the company. These services and activities provide investors with more convenience and benefits, and interested investors should pay attention.

Advantages of High-Dividend ETFs in the Hong Kong Stock Market

Risk Diversification

One of the biggest benefits of investing in high-dividend ETFs in the Hong Kong stock market is the ability to diversify risk. Investors do not need to select stocks individually; by investing in an ETF, they effectively invest in multiple high-dividend companies simultaneously. This investment approach can effectively balance individual stock risks arising from fluctuations in the earnings of specific companies. In the stock market, the performance of individual stocks is influenced by a variety of factors, such as company performance, industry competition, and the macroeconomic environment. Certain stocks may experience significant price declines due to unexpected events or internal operational issues. However, by investing in high-dividend ETFs, investors' capital is distributed across multiple companies; even if a few of these companies perform poorly, the strong performance of others can partially offset losses, thereby reducing the overall risk of the investment portfolio.

High Liquidity

High dividend ETFs exhibit high liquidity, allowing them to be bought and sold on the exchange at any time, as conveniently as trading ordinary stocks. This liquidity advantage enables investors to flexibly adjust their portfolios in response to market changes and their own cash needs. When the market is favorable and investors believe there are more promising investment opportunities, they can quickly sell high dividend ETFs to reallocate funds to other investment targets; when market volatility occurs, investors can also timely sell ETFs to obtain cash for unexpected situations. Compared to other investment products, such as real estate or private equity funds, high dividend ETFs clearly possess superior liquidity.

Continuous Income

Many high dividend ETFs are characterized by continuous income, with many ETFs distributing dividends quarterly or even monthly. This means that investors can regularly receive cash income, akin to having an additional monthly "bonus" automatically deposited into their accounts. For investors seeking stable cash flow, particularly those over the age of forty who wish to have low-risk additional income each month, this feature of continuous income is highly attractive. Investors can use this income for daily expenses, travel, retirement planning, and so forth, thereby enhancing their quality of life and financial security.

How to Select High Dividend ETFs? A Comprehensive Comparison of Four ETFs

If investors wish to buy, sell, or compare different Hong Kong high dividend ETFs, the process is not complicated:

Open the Futu App, enter the market, select Hong Kong stocks, then click on ETFs, and use the filter to conveniently select your desired ETF.

However, faced with the multitude of high dividend ETFs in the market, how does one choose the one that best suits their needs? This introduction outlines several selection methods, primarily considering the following aspects. (The following uses four Hong Kong ETFs as examples:$Fubon Hang Seng Shanghai-Shenzhen-Hong Kong (Selected Corporations) High Dividend Yield Index ETF(03190.HK)$ 、  $Global X Hang Seng High Dividend Yield ETF(03110.HK)$ 、  $Global X Asia Pacific High Dividend Yield ETF(03116.HK)$ 、  $Ping An of China CSI HK Dividend ETF(03070.HK)$ ）

Dividend Yield and Payout Frequency

When selecting high-dividend ETFs, the dividend yield is one of the important considerations, but it is not sufficient to pursue a high yield alone; one must also pay attention to the stability of the dividends. The four ETFs introduced here have dividend yields ranging from 4% to 5%, which is a relatively reasonable range. More importantly, these ETFs have maintained a consistent payout frequency in the past, typically distributing dividends quarterly or semi-annually. A stable payout frequency allows investors to better plan their cash flow and anticipate future income.

In addition, overall, high-yield equity ETFs have low management fees, approximately 0.6%, and lower management fees help enhance the actual returns for investors.

Size and Liquidity

Although the objective of investing in high-dividend ETFs is typically to obtain long-term income from dividends, it is crucial to select large-scale, actively traded ETFs to ensure smooth transactions when selling the ETFs in the future. Large-scale and high-volume ETFs indicate a high level of market recognition and strong liquidity.

For example, $Global X Asia Pacific High Dividend Yield ETF(03116.HK)$ this ETF has experienced the highest appreciation among various ETFs over the past three years, reaching 55%. However, its average daily trading volume is only over 2,000, which is relatively low compared to the other three ETFs. This may result in difficulties in finding buyers when selling, posing certain liquidity risks. Therefore, while investors pursue price returns, they should also balance the risks associated with trading volume and prioritize ETFs that are large-scale and actively traded.

Entry Fee

The entry fees for high-dividend ETFs in Hong Kong are relatively low, with the four ETFs having entry fees ranging from 300,000 to 400,000 Hong Kong dollars. This means that investors do not need to invest a large amount of capital to participate in high-dividend ETF investments. For example, assuming an investment of 800,000 Hong Kong dollars in ETFs, with an average dividend yield of 5%, one could expect an additional income of about 40,000 Hong Kong dollars annually, resulting in approximately 3,000 Hong Kong dollars of extra pocket money each month, which would automatically flow into the investor's account, providing a stable cash flow.

Expert Opinions on High-Dividend ETFs

Regarding which high-dividend ETF experts prefer, Mr. Wen (Wen Gangcheng) shared his views.

He believes that in terms of potential, technology or pharmaceutical stocks may have higher explosive power in the last two to three months, but high-dividend ETFs have their unique advantages. High-dividend ETFs have taken four years to show performance, offering significant benefits in a declining interest rate environment. If funds are placed in a bank for fixed deposits, with future interest rates likely decreasing—such as currently where a fixed deposit may yield only 2% while high-dividend stocks may yield 6%—people may be more inclined to choose high-dividend stocks.

However, there are some aspects to be aware of when investing in high-dividend ETFs.

First, one should pay attention to trading volume; some ETFs in Hong Kong may have lower trading volumes, potentially not reaching 1 million, or even tens of thousands may be hard to achieve. If the trading volume is too low, investors may encounter difficulties when attempting to sell the ETF, possibly needing to seek a discount from the issuer to sell it. Therefore, the most basic requirement is that the trading volume of the ETF should be sufficient to ensure that there will be no issues when trying to sell after purchase.

Secondly, one should monitor the performance of the underlying assets; if the performance difference among the underlying assets is not significant, it indicates that the high-dividend companies in which the ETF invests are relatively stable overall, which is one of the factors to consider when selecting an ETF. Additionally, for ETFs or smaller funds, there are some fixed costs, such as management fees and operating expenses, which may result in a higher proportion of expenses, thereby eroding returns. Therefore, management fees are also an important consideration for investors when choosing an ETF.

High-dividend individual stocks are also an option.

In addition to high-dividend ETFs, there are also numerous high-dividend individual stocks available in the market, which have the potential to achieve both income and capital gains. If investors have time, they can review related videos introducing high-dividend stock strategies, including the 'Lin Benli's Confidential High-Dividend Stock Secrets' for reference. Lin Benli's Confidential High-Dividend Stock SecretsHigh-dividend individual stocks can provide investors with another investment option. Investors can consider whether to invest in high-dividend individual stocks based on their risk tolerance, investment goals, and understanding of the individual stocks.

In summary, Hong Kong's high-dividend ETFs offer investors a low-risk income investment option with advantages such as risk diversification, high liquidity, and continuous income. When selecting high-dividend ETFs, investors can consider multiple factors such as dividend yield, dividend frequency, scale, trading volume, and entry fees. At the same time, they can also pay attention to investment opportunities in high-dividend individual stocks, formulating suitable investment strategies to achieve stable asset appreciation and steady cash flow.