The explosion in the Hong Kong stock market in the first quarter of this year was remarkable. The Hang Seng Index rose by 15.25%. However, as global capital markets entered a period of turbulence, uncertainty increased significantly since the second quarter. In this environment, many institutions and brokerage firms have advised investors to find a “safe haven” during market shocks, set their sights on high-dividend companies with steady profit expectations, and allocate such assets as bottom positions to obtain relatively definite dividend returns. However, many experts also warned that we need to be wary of the “high dividend trap.” Dai Kang, managing director of the GF Securities Development Research Center and chief asset research officer, believes that compared to the A-share and US stock markets, the high-dividend strategy of Hong Kong stocks performs more prominently and is a long-term winning strategy, but traditional high-dividend investment methods create two major pitfalls, including “dividend traps” and “valuation traps,” and it is necessary to screen and select real high-dividend varieties.

The explosion in the Hong Kong stock market in the first quarter of this year was remarkable. The Hang Seng Index rose by 15.25%. However, as global capital markets entered a period of turbulence, uncertainty increased significantly since the second quarter. In this environment, many institutions and brokerage firms have advised investors to find a “safe haven” during market shocks, set their sights on high-dividend companies with steady profit expectations, and allocate such assets as bottom positions to obtain relatively definite dividend returns. However, many experts also warned that we need to be wary of the “high dividend trap.” Dai Kang, managing director of the GF Securities Development Research Center and chief asset research officer, believes that compared to the A-share and US stock markets, the high-dividend strategy of Hong Kong stocks performs more prominently and is a long-term winning strategy, but traditional high-dividend investment methods create two major pitfalls, including “dividend traps” and “valuation traps,” and it is necessary to screen and select real high-dividend varieties.