Holding 10,000 yuan to invest in financial stocks, how can small investors steadily earn dividends and catch the rebound rally?

The Taiwan stock market is consolidating at around 28,000 points. Although the AI rally in Tech Stocks is eye-catching, sharp-eyed investors have already noticed an interesting phenomenon—large amounts of capital are quietly shifting toward long-neglected financial stocks.

In contrast, one-year bank fixed deposits only yield 2% interest, while financial stocks can provide stable dividends of 5-7%, plus potential upside from share price rebounds. The gap is quite significant.

So, the question is: Is it worthwhile to enter financial stocks at this stage? How can small investors with only 10,000 NT dollars effectively allocate? Today, we’ll take a deep dive.

Why is now a good time to buy financial stocks?

Valuation opportunities have emerged

Electronics stocks, especially AI-related ones, have P/E ratios soaring above 30, but profit growth can’t keep pace with share price increases. By contrast, large banks typically have P/E ratios around 10-12, while financial stocks generally range from 15-20, making their prices relatively reasonable. With expectations of a soft landing in the economy, capital is starting to shift toward value stocks with stable profits and cash flow support.

Interest rate environment favors the financial industry

Although the Federal Reserve is entering a rate-cutting cycle, which will pressure net interest income, Taiwan’s financial holdings have already earned over 560 billion NT dollars in the first 11 months of this year—setting a record high. More importantly, as long as the economy doesn’t experience a hard landing by 2026, the overall dividend-paying capacity of financial holdings is likely to be even stronger than this year. Share prices naturally have room to rebound.

Defensive characteristics are especially valuable during high-level oscillations

When Tech Stocks pull back, they often drop 10%, but financial stocks usually only fluctuate 3-5%. During the 2022 bear market, the weighted index fell over 20%, but the financial index declined less than 15%. The psychological burden is significantly lighter. This “attack when possible, defend when necessary” trait is particularly valuable in the current high-level consolidation environment.

How are financial stocks categorized? Where should small investors start?

There are about 49 listed financial stocks in Taiwan, mainly divided into:

Financial Holding Companies — Most popular among beginners. They encompass diverse businesses like banks, life insurance, securities, and asset management, offering risk diversification and stable dividends (most above 5%). Examples include Cathay Financial, Fubon Financial, and CTBC Financial, which are perennial favorites.

Bank Stocks — Suitable for those seeking stable holdings. Their operations are relatively simple, with less volatility, but growth potential is lower than financial holdings.

Insurance and Securities Stocks — More volatile, suitable for entering during market trend shifts.

How can small investors with 10,000 NT dollars allocate?

If the principal is limited, the smartest approach is to start with financial ETFs (such as 0055 Taiwan Financial ETF, 006288U Financial ETF). They have low thresholds and diversify risk. If you prefer selecting individual stocks, you can buy 1-2 stable financial holdings in batches, accumulating dividends while saving.

Recommended list of Taiwanese financial stocks

Based on the latest data, here are options suitable for different investors:

Fubon Financial (2881)

• 2025 share price projection: start at 65 NT → end at 85 NT, approx. 30% increase
• Dividend yield: 6.5%
• Core advantages: stable insurance subsidiaries, fast wealth management growth, leading digital transformation
• P/E ratio: about 12 times

Cathay Financial (2882)

• 2025 share price projection: start at 50 NT → end at 68 NT, approx. 36% increase
• Dividend yield: 6-7%
• Core advantages: strong Southeast Asian insurance business, 15% annual growth in wealth management fees, international expansion providing growth momentum
• P/E ratio: about 11 times

CTBC Financial (2891)

• 2025 share price projection: start at 28 NT → end at 36 NT, approx. 28% increase
• Dividend yield: 5.5%
• Core advantages: significant growth in digital banking users, leading mobile app transformation
• P/E ratio: about 13 times

E.SUN Financial (2884)

• 2025 share price projection: start at 25 NT → end at 32 NT, approx. 28% increase
• Dividend yield: 6%
• Core advantages: steady SME loans, 10% annual growth in net interest income, conservative management attracting capital
• P/E ratio: about 12 times

Chang Hwa Bank (2801)

• 2025 share price projection: start at 16 NT → end at 20 NT, approx. 25% increase
• Dividend yield: 5%
• Core advantages: high capital adequacy ratio, excellent loan quality, low valuation as a pure bank
• P/E ratio: about 10 times, the most undervalued option

Practical strategies for buying financial stocks

Step 1: Stock selection criteria

Choose stocks with at least 5% dividend yield, P/E ratios between 10-15, and stable profits. Fubon Financial, Cathay Financial, and E.SUN Financial meet these conditions.

Step 2: Entry timing

Typically, buy during high-level consolidation of the market or when electronics stocks pull back after a rally, or when dividend yields exceed 6-7%. Avoid putting all your money in at once; stagger your purchases over 3-5 times for better safety.

Step 3: Holding strategy

Buy and hold, collecting dividends annually as interest income. No need to watch the market daily. Set target prices but stay flexible—if company profits improve, raise your target. Buffett said, “Time is the friend of a good company,” and mature industries like financial stocks become more attractive the longer you hold.

Step 4: When to reduce holdings

When your psychological target price is reached, or dividend yield drops below 4% (indicating share price has risen too much), consider trimming or selling entirely, then switch to undervalued alternatives.

Consider swing trading too

Financial stocks are cyclical “economic cycle stocks,” suitable for swing trading. Use moving averages, support/resistance levels, RSI, and other technical indicators to profit from upward and downward swings, adding flexibility.

However, swing trading requires more time and experience. Beginners are better off starting with long-term dividend investing.

Risks to know when investing in financial stocks

Market risk

During bear markets, financial stocks often decline significantly. For example, during China’s stock crash in 2015, Taiwan’s 50 Index fell 24.15%, and Yuanta MSCI Financial fell 36.34%. Systemic risks amplify during black swan events.

Interest rate risk

Rate cuts can lower net interest income, while rate hikes cause volatility. Financial stocks are highly sensitive to interest rate changes, which are difficult to predict precisely.

Loan default risk

In economic downturns, corporate debt repayment ability declines, increasing bad debt risks for banks. Since the financial industry involves many sectors, this risk cannot be ignored.

Are US financial stocks worth watching?

If you want to venture into US stocks, these are worth noting:

JPM JPMorgan Chase — America’s largest bank, projected to rise 30-35% by 2025, with a solid investment banking position.

BAC Bank of America — America’s second-largest bank, a retail deposit leader, with over 35% growth expected by 2025.

BRK.B Berkshire Hathaway — Warren Buffett’s investment holding giant, with stable insurance operations, known as “the most stable defensive stock in US stocks.”

GS Goldman Sachs — Top Wall Street investment bank, most explosive during M&A and IPO rebounds, but more volatile; recommend keeping within 20% of your portfolio.

AXP American Express — Premium credit card company, strong customer spending power, less volatile than traditional banks.

Final advice

Although financial stocks may seem boring and conservative, they account for 13% of the S&P 500 and have long-term potential to outperform the market. With reasonable valuation, stable dividends, and lower volatility, they are especially suitable for investors seeking steady cash flow.

If you only have 10,000 NT dollars, consider starting with financial ETFs or 1-2 stable financial holdings. Buy in batches, hold patiently, and collect dividends annually. The longer you hold, the more powerful the compound effect.

Of course, don’t treat financial stocks as risk-free alternatives to fixed deposits. Proper portfolio allocation and risk control are key to long-term success.