On July 4th,bank stocks experienced a high retreat,with Bank of Communications' shares temporarily rising to 7.8 yuan during the trading session,setting a historical record.However,by the close,31 bank stocks had declined,with Changshu Bank,Zheshang Bank,and Shanghai Bank,which had recently shown strong performance,leading the way in terms of the magnitude of their pullback.

Many investors who have bought into bank stocks are wondering whether they should take this opportunity to add to their positions or sell.

In the first half of this year,due to their low volatility and high dividend characteristics,bank stocks became the most favored sector by capital.The related indices of the banking sector saw significant increases,with the CSI Banking Index (399986) rising by 17.25% year-to-date,ranking first across all industries; the Banking ETF (512800) accumulated a 19.67% increase.

Several individual stocks within the banking sector also successively reached new highs in recent years.The market value of Industrial and Commercial Bank of China once surpassed that of Kweichow Moutai,becoming the most valuable individual stock on the A-share market.Most stocks in the banking sector also recorded substantial gains.Wind data shows that in the first half of this year,out of 42 A-share listed banks,38 recorded positive increases,with Nanjing Bank leading the way with a cumulative increase of 48.84%,followed by Chengdu Bank and Changshu Bank with increases of 34.90% and 34.19% respectively,ranking second and third,while Hangzhou Bank and Chongqing Rural Commercial Bank also saw significant gains.

Analysts believe that the fundamental logic behind the surge in the banking sector is driven by dividend value.Amid an asset scarcity and significant fluctuations in the equity market,high dividend and high dividend-paying bank stocks have become the preferred choice for capital to ensure investment returns,attracting funds from various sources."Bank stocks with high dividends and low volatility match the low-risk preference of incremental capital," said Liang Fengjie,the chief analyst of the banking industry at Zheshang Securities.He also pointed out that banks are an important part of the broad-based market and are expected to benefit from the growth of passive index funds.

According to calculations by Zheshang Securities,from 2018 to 2023,the cumulative increase in the banking sector reached 18.4%,although it is at the lower 25% level across all industries,it has a smaller volatility,with a volatility rate of only 2.45%,showing characteristics of stable profitability.In addition,over the past five years,the average dividend yield of the banking sector has been 4.9%,ranking second across all industries.The dividend yield for 2023 remains high,with 19 individual stocks having a dividend yield exceeding 5% as of the close on July 4th,with the highest reaching 7%,far exceeding the return rate of financial products during the same period.

Wind data shows that as of July 4th,19 listed banks have completed their 2023 dividend distribution,with a total cash dividend payout of 139.893 billion yuan,of which eight banks have a dividend payout ratio exceeding 30%,accounting for more than 40%.

Among them,in the six major state-owned banks,the Agricultural Bank of China has taken the lead in implementing the dividend distribution plan,with a total dividend payout of about 80.8 billion yuan; Ping An Bank,Huaxia Bank,and Zheshang Bank have completed the implementation of their dividend distribution plans,with a total payout of 24 billion yuan.In addition,on the 5th,three banks will also implement their dividend distribution plans,namely Wuxi Bank,Qilu Bank,and Chengdu Bank,with payout amounts of 439 million yuan,1.064 billion yuan,and 3.42 billion yuan respectively.

There are voices in the market suggesting that the second half of the bank stocks has just begun.Liang Fengjie pointed out that,looking at the present,he is optimistic about the banking sector,"Buying banks = buying certainty in uncertainty," and the current stage is one of buying into dividend and valuation certainty.

"In the context of asset scarcity,the value of banks as quasi-fixed income assets for allocation still exists," said Yuan Zheqi,a banking industry analyst at Ping An Securities,in his report.He pointed out that the current static valuation of the banking sector is 0.58 times,with a dividend yield of 4.8%,which is still at a high premium level compared to the risk-free interest rate.However,some industry insiders have warned of the risks associated with high dividend stocks."From past experience,there have been cases where banks' stock prices have fallen after dividends are paid," said a person in charge of proprietary trading at a securities firm in East China to a reporter.On the day of ex-dividend and ex-interest for listed companies,the company's stock price will be adjusted downward based on the cash distributed per share.In other words,for investors who buy the company's stock shortly before the implementation of the dividend,a high cash dividend will not necessarily bring corresponding high returns.

The aforementioned proprietary trader warned that after many investors receive the cash dividends distributed by the company,the company's stock price may further decline,ultimately leading to a reduction in the market value of the individual stocks in the investors' holdings,and the situation where the dividend yield itself rises.Many bank stocks may have already "overdrawn" the dividend expectations,seemingly having a high dividend yield,but the ability to continue cash dividends in the future is worrying and should be vigilant.