Rational Choices in the High-Volatility Market: How High-Dividend ETF Becomes a Safe Haven for Taiwan Stock Investors

Taiwan stocks recently broke through 28,400 points to hit a new all-time high, yet market sentiment has shown typical caution at high levels. The best illustration of this story is the real voting behavior of capital—according to trading data, among the top ten daily traded passive Taiwan stock ETFs over the past month, high-dividend categories occupy five seats, including Capital Securities Taiwan Select High Dividend (00919), Cathay Sustainable High Dividend (00878), Fubon Select High Dividend 30 (00900), Yuanta High Dividend (0056), and Yuanta Taiwan Value High Dividend (00940).

What is hidden behind this phenomenon? Simply put, when the stock market is at a relatively high level, investors no longer blindly chase highs but instead shift their thinking: how to participate in market growth while protecting assets through stable cash flow? Especially when global AI concept stocks have experienced astonishing gains and valuations have reached high levels, this shift in mindset becomes particularly critical.

From the International Market: The Debate Over the Definition of “Quality”

To understand why Taiwan high-dividend ETFs attract funds, let’s first look at an interesting “battle of quality factors” unfolding in the US market.

Two US ETFs with over $10 billion in assets—iShares MSCI USA Quality Factor (QUAL) and Invesco S&P 500 Quality (SPHQ)—both claim to invest in “quality companies,” but their stock selection logic diverges at a key point.

SPHQ uses “accounting items” as a core screening indicator, in plain terms, emphasizing the “proportion of actual cash received from a company’s profits.” This perspective is quite pragmatic—when accounts receivable increase significantly, it indicates that the company needs to advance large amounts of capital and wait for customer payments to realize cash, directly reflecting cash flow quality. Because of this strict standard, SPHQ has adjusted its holdings over the past year, reducing positions in AI giants like NVIDIA, Meta, and Microsoft due to surging accounts receivable. For example, NVIDIA’s latest financial report shows accounts receivable soaring by $16 billion, meaning the company’s large profits are temporarily difficult to realize as cash.

In contrast, QUAL does not adopt this indicator, so its portfolio remains heavily weighted toward tech giants. As a result, performance divergence has become evident: during the AI stock surge, SPHQ led the way; but over the past six months, QUAL has significantly outperformed due to its heavy holdings in tech stocks.

This debate touches on a core question: when companies spend hundreds of billions of dollars on AI investments, are these future profit gold mines or necessary expenses that temporarily suppress cash flow? When capital expenditures expand and companies take on debt for investments, can the so-called “quality” label withstand the test of time?

How Taiwan High-Dividend ETFs Seek Stability Amid Uncertainty

Faced with similar market concerns, Taiwan high-dividend ETF strategies demonstrate different approaches.

00919, as the most actively traded high-dividend target recently, has risen 2.33% in the past month, outperforming the broader market, and has maintained an estimated annualized dividend yield above 10% for 11 consecutive quarters. Fund manager Hsieh Ming-Chih pointed out that as the stock market consolidates at high levels, capital is undergoing a rational reallocation—from overgrown tech stocks to value stocks with reasonable valuations, stable operations, and dividend potential. Financial stocks have become key beneficiaries of this rebalancing.

This logic is quite profound: financial stocks still have room for profit growth amid the current easing trend, and their dividend sustainability is relatively strong. More importantly, these companies often represent genuine competitiveness in Taiwan’s economy—whether financial institutions or traditional blue-chip companies, many are top-tier stocks comparable to Taiwan’s stock kings, with cash flows far more stable than those of tech startups still in large-scale investment phases.

Take 00919 as an example: its latest quarterly dividend remains steady at NT$0.54, with the ex-dividend date set for December 16. This ongoing dividend commitment is a reason for continuous net capital inflows. The core logic of investing in high-dividend ETFs is essentially to build a portfolio of mature companies that combine growth potential with defensive qualities.

Cash Flow Is the True Long-Term Competitive Edge

Research from international asset management firms also supports this view. BlackRock’s chief investment strategist Wei Li once stated that the uncertainty brought by AI is too great, and the current business model of “spending money first, then expecting future income” has not yet been fully validated for profitability. This explains why many institutional funds have started reducing their chase for concept stocks at market highs and are shifting toward assets that provide assured cash flow.

Dimensional Fund Advisors’ research director Mamdouh Medhat put it more plainly: quality investing doesn’t require overly complex logic—just focus on companies with strong profitability, relatively reasonable valuations, and well-controlled capital expenditures, which can naturally generate excess returns over the long term. This is precisely the core appeal of high-dividend ETFs.

Conclusion: Finding Certainty in Uncertainty

As Taiwan stocks reach new highs, the flow of funds already speaks volumes. Whether it’s the reevaluation of “quality” in the US market or the consistent preference for high dividends among Taiwan investors, they point to the same investment philosophy—amid rising macro uncertainty, companies with solid financial health, genuine cash flow, and a willingness to reward shareholders are the true foundation of long-term investment portfolios.

For investors, rather than obsessing over whether to heavily allocate to a certain hot concept, it’s wiser to construct a portfolio through carefully selected high-dividend ETFs. This approach allows participation in Taiwan’s overall growth while using stable dividend income to hedge against market volatility. Such asset allocation may be the most intelligent choice in the current environment.