Chinese Companies: Another Year of Record Dividend Payouts in 2025?

As we step into 2025, investors are buzzing with anticipation, wondering if Chinese companies will once again set new records for dividend payouts. In 2024, Chinese listed firms paid out a staggering 2.4 trillion yuan ($328 billion) in dividends, with companies buying back 147.6 billion yuan worth of shares. Goldman Sachs estimates that Chinese companies' cash distribution could hit $3.5 trillion in 2025, signaling another year of record-breaking payouts.

But what sectors within the Chinese economy are expected to drive these record dividend payouts in 2025? And how will the government's policies and regulations continue to influence these payouts?

1. Technology and Electric Vehicles: In 2024, the technology sector contributed significantly to dividend growth, with $44.6 billion in dividends. Companies like Alibaba (BABA) and BYD (BYDDF) led the way, with Alibaba introducing a regular payout alongside a special dividend of $6.8 billion, and BYD setting a dividend record. The electric vehicle sector also contributed to record payouts, with BYD's commercial success reflected in its high dividends. These trends are expected to continue in 2025.
2. State-owned Enterprises (SOEs): SOEs, particularly those dual-listed in Hong Kong, have been responsive to Beijing's call to enhance shareholder returns. In 2024, SOEs accounted for a significant portion of dividend payouts, and this trend is expected to continue in 2025. Notable SOEs like PetroChina and CNOOC Group have high dividend yields, with PetroChina at around 8% and CNOOC Group at 7.54%.
3. Government Policies and Regulations: The Chinese government's policies and regulations, such as the capital-market reform plan and dividend distribution encouragement, are expected to continue influencing dividend payouts in 2025. The once-in-a-decade capital-market reform plan, unveiled in April 2024, has already triggered a rally in SOEs and encouraged dividend distribution. The government has actively promoted companies to pay higher shareholder returns by providing tax incentives and reinforcing stock listing standards. These policies are likely to continue boosting shareholder returns in 2025.

In conclusion, Chinese companies are poised to deliver another year of record dividend payouts in 2025, driven by the technology and electric vehicle sectors, as well as the continued influence of government policies and regulations. Investors should keep a close eye on these developments and consider allocating a portion of their portfolios to dividend-paying Chinese companies to take advantage of this trend.