Investment Choices in the AI Era: The Steady Role of High-Yield ETFs in the AI Wave

Taiwan stocks recently broke through the historic high of 28,400 points, but the market at high levels seems to have lost some of its enthusiasm. From the perspective of capital flows, investors’ enthusiasm appears to have undergone a subtle shift—those ETF products that emphasize high dividends are now becoming the most traded favorites.

The near-month increase of Capital Securities Taiwan Select High Dividend ETF (00919) reached 2.33%, not only leading the market but also maintaining an estimated annualized dividend yield of over 10% for 11 consecutive quarters, making it a preferred choice for many investors. What is the underlying implication of this phenomenon? When the market is at a high point and AI concept stocks are no longer cheap, capital is making a rational choice—from pursuing growth for excitement to seeking stability and cash flow security.

Questioning AI Investment: Insights from the US ETF Competition

In the international market, discussions about what constitutes a “truly quality company” serve as a mirror reflecting the current AI investment craze.

Two giant US stock ETFs—iShares MSCI USA Quality Factor (QUAL) and Invesco S&P 500 Quality (SPHQ)—both claim to select financially sound, profit-stable companies, but a key difference in their stock selection logic results in vastly different portfolios.

SPHQ’s core criterion is “accounts receivable ratio,” meaning the fund emphasizes actual cash collected by the company rather than on-paper receivables. This strict standard has led it to gradually divest AI leaders like NVIDIA, Meta, and Microsoft this year. For example, NVIDIA’s latest financial report shows a surge of $16 billion in accounts receivable—companies must front large sums of money, and only after customers pay can it convert to real cash flow.

In contrast, QUAL does not adopt this indicator, and its portfolio remains heavily weighted toward tech giants. This has led to interesting performance swings: when AI stocks soared, SPHQ once led; but over the past six months, QUAL has been far ahead due to its steadfast focus on tech stocks.

This debate points to a deeper issue: are the tech giants investing billions of dollars in AI development laying the groundwork for future gold mines, or are they piling up financial black holes? When cash flow faces pressure or even needs to borrow to support AI investments, can the label of “quality company” still shine brightly?

Pragmatic Stock Selection Logic of High Dividend ETFs in Taiwan

Faced with the same market uncertainties, Taiwan’s high dividend ETFs adopt a more mature strategy. Among the top ten most actively traded passive Taiwan stock ETFs in the past month, five are high dividend products, including 00919, Cathay Sustainable High Dividend (00878), Fubon Select High Dividend 30 (00900), Yuanta High Dividend (0056), and Yuanta Taiwan Value High Dividend (00940).

This is not a coincidence but a collective consensus among investors—amidst record highs, capital is shifting from AI tech stocks to value-oriented stocks with reasonable valuations and stable operations, especially financial stocks. For example, the manager of 00919 pointed out that as the stock market rises, some funds are moving toward financial stocks with dividend potential because, in a declining interest rate environment, financial stocks can still maintain profit growth while providing stable dividend returns. The latest dividend payout remains at NT$0.54, with the ex-dividend date set for December 16. The long-term dividend commitment continues to attract funds seeking a “balance of growth and income.”

High Dividend ETFs vs. AI Dream Stocks: Who Is More Worth Betting On

Baird’s Chief Investment Strategist Wei Li once stated that the uncertainty brought by AI exceeds expectations. The current “spend big first, then expect future income” AI investment model has yet to be proven profitable by the market. This also explains why many savvy funds are shifting toward high dividend ETFs at market highs—rather than chasing uncertain dreams, it’s better to hold onto more certain cash flows.

Dimensional Fund Advisors’ Research Director Mamdouh Medhat’s view hits the core: quality investments do not need to be complicated. Focusing on companies with strong profitability, reasonable valuations, and moderate capital expenditure will help you accumulate excess returns over time.

High Dividend ETFs Becoming the New Favorite in High-Volatility Environments

As Taiwan stocks hit new highs, the flow of market capital reveals the truth. High dividend ETFs are gradually becoming safe havens in volatile markets. Whether it’s the debate over the definition of “quality” in US stocks or Taiwanese investors’ cautious attitude toward AI’s future prospects, they all point to the same investment logic— in an environment of high uncertainty, companies with solid financial health, clear cash flow, and a willingness to reward shareholders are the real long-term investment chips.

For investors, there’s no need to overthink in the face of the AI wave. By investing through a basket like high dividend ETFs, you can participate in market growth while hedging the risks brought by the AI craze. This might be the smartest asset allocation move at present.