With major state-owned banks' three-year fixed deposit rates entering the "1% era," a growing number of young people are rethinking the traditional approach to saving and earning interest. "The dividend has arrived in my account today," says 31-year-old white-collar worker Lily (pseudonym), who checks her dividend index fund on Alipay the moment she wakes up. She shares a screenshot in her investment community with the caption: "A second stream of cash flow outside my salary." This is her daily "income moment," and she is far from alone.

More young investors are posting similar screenshots online — some set modest goals like "dividends covering my bubble tea expenses," others aim for "dividends covering utility bills," while some have no specific target and simply reinvest their payouts. Many maintain detailed "dividend calendars," meticulously tracking ex-dividend dates and payment schedules. Rather than showcasing portfolio returns, they prefer to display their cash flow. They jokingly call themselves the new "yield collectors" — transitioning from accumulating interest and rental income to accumulating dividends, from single savings accounts to diversified allocations. A quiet shift in financial philosophy is underway among younger generations.

Interest Rates Dip Below 1%, Pushing Yield Seekers to Find Alternatives

Lily was once a typical "deposit hunter." A few years ago, she would take high-speed trains on weekends to open out-of-town bank accounts, just to capture a few extra basis points on deposit rates. Now she has stopped traveling and adopted a different strategy: shifting from deposit interest to dividend income. Since the start of 2026, long-term deposit rates at smaller banks have rapidly entered the "1% range," with three-year and five-year fixed deposit rates falling 80 basis points from 2.2% to 1.4%. Several private banks have even removed three-year and five-year deposit products entirely — long-term deposits that once offered rates above 2% have mostly retreated to the annualized 1% range.

The appeal of deposits lies in guaranteed principal and interest — absolute stability. However, a segment of young investors willing to accept some volatility for potentially higher returns are now becoming "yield collectors" in dividend-paying assets. Chen Mo, born in the 2000s, split his maturing deposits into two parts: one portion stays in money market funds for daily expenses, while the other goes into regular investments in dividend index funds. His goal is straightforward — receiving a dividend payment each month, much like collecting rent. "I don't expect the stock price to surge in the short term. What I hope for is that dividends keep arriving consistently over the long run."

Wang Qing, born in the late 1990s, shared his "income collection" records on social media: he invested over 50,000 yuan in high-dividend insurance stocks and received more than 2,000 yuan in dividends last year. Despite some share price volatility, the stocks recovered within a year, and he remarked, "Compared to the 1% fixed deposit rate at banks, I'm quite satisfied." While individual high-dividend stocks carry greater volatility, high-dividend index funds tend to fluctuate less. Although different young investors choose different assets, an accelerating trend unites them: they are becoming "yield collectors" who value cash flow and the power of compounding over time.

Building Dividend Portfolios, Index Funds Become the Starting Point

Why have dividend index funds become the first stop for young "yield collectors"? The reasons are straightforward: low entry barriers, relatively frequent dividend distributions, and underlying assets that are predominantly cash-flow-stable enterprises. Even rental yields are declining these days. Securing good rental returns now requires careful selection of property location and condition, while the rental process itself carries risks of vacancy and tenant neglect. In contrast, leading companies in banking, utilities, highways, and energy sectors typically possess sustained dividend-paying capabilities. For young investors with limited capital and experience, dividend index funds offer a relatively accessible tool with manageable risk exposure.

From "deposit hunters" to "bond fund egg collectors" and now dividend fund "yield collectors," the investment path of young people is undergoing a clear evolution — from seeking guaranteed principal and interest to accepting measured volatility in exchange for slightly higher returns. Market data confirms this trend. Public data shows that in the first half of the year, the total scale of dividend-style index funds reached 310.24 billion yuan, a year-on-year increase of 49%. Since 2026, dividend index funds have averaged 4.83 distributions per year. Over the past year, the average dividend yield of the CSI Dividend Index stood at 4.7%.

According to Ant Fortune data, keyword searches for "dividends" and "yield" grew nearly threefold year-on-year in the first half of the year. As of August 31, platform users received 2.6 billion yuan in various fund distributions, with over 20 million people participating in distributions in the past three years. Young people are becoming the fastest-growing segment of this "yield collection" wave. Among the platform's dividend index fund users, those born after 1995 and 2000 account for nearly 40% — almost on par with middle-aged users — but with 44% year-on-year growth, making younger investors the fastest-expanding group. Some young people are quietly recognizing the importance of cash flow.

Dividend Collecting Isn't Risk-Free; Red Funds Work Best as Equity Core Holdings

"The core of a dividend strategy is selecting high-quality companies with consistent distributions and stable cash flow. Such assets may underperform during growth-style market phases but demonstrate greater resilience during market turbulence," notes an Ant Fortune representative, who also cautions: "High dividends do not equal guaranteed principal and interest, and fund distributions are not extra returns but rather periodically realizable cash flow. Investors still need to pay attention to investment risks and regularly adjust their strategies based on life stages and market conditions."

In the first half of 2026, the dividend sector experienced a notable correction, with dividend low-volatility index funds seeing periodic net value drawdowns. Over the past three years, dividend-style index funds averaged a maximum drawdown of 14.6% — still lower than the CSI 300 Index's 21% maximum drawdown and the ChiNext Index's 31.8% drawdown over the same period. Industry experts advise young investors considering "yield collection" to honestly assess their risk tolerance, avoid blindly buying at market peaks, never use leverage, and treat dividend assets as equity core holdings or defensive allocations.

Chen Mo has also experienced unrealized losses. A dividend low-volatility index fund he purchased once dipped, but he didn't sell. "If you want higher returns than deposits, you have to accept volatility. As long as the fluctuation stays within my acceptable range, that's fine. What matters more to me is the dividend, not short-term price differences. As long as the underlying companies' fundamentals and logic remain intact and they keep generating profits and paying dividends, I'm willing to hold on."

According to public data calculations, from early 2021 to the end of 2025, holding only aggressive assets like the ChiNext Index Fund over five years would have yielded approximately 7.9% returns with a maximum drawdown of 24.3%. However, allocating 50% to dividend low-volatility funds as an equity core while combining aggressive equity assets would have boosted returns to 43.1% while reducing the maximum drawdown to 9%. This demonstrates that while aggressive assets offer greater upside potential, they suffer deeper drawdowns in volatile markets; dividend low-volatility assets may not generate spectacular returns but provide stronger downside protection. Combining the two effectively reduces return volatility. For "yield collectors," the significance of dividend low-volatility index funds lies not in replacing aggressive assets but in serving as an equity core foundation — holdings that can be maintained through market cycles while waiting for dividends, rather than churning through short-term price movements.

Sha Chuan, fund manager at Tianhong, highlights two long-term rationales for dividend assets: first, investors' risk appetite is gradually declining, with investment styles shifting from capturing high returns through short-term price swings toward pursuing long-term stable dividend income; second, bond yields and deposit rates are likely to remain at relatively low levels, making dividend yields comparatively more attractive.

Save and Allocate Simultaneously — "Yield Youth" Build Custom Cash Flow Formulas

Buying dividend assets is just the beginning. More "yield youth" are choosing to save and allocate simultaneously, fundamentally applying dividend thinking to manage every dollar — not chasing overnight riches but pursuing sustainable cash flow. Investor Lin Xiao divides her funds into four parts: liquid cash in a money market account earning small interest for immediate needs; short-term stable funds in bond funds, accepting minor fluctuations for higher returns than deposits; medium-term funds seeking slightly higher returns allocated to high-dividend index funds; and long-term retirement savings in pension insurance products to lock in long-term rates. Each of the four buckets serves its purpose, forming a balanced "yield matrix."

Ant Fortune data shows that 90% of dividend index fund holders have allocated to three or more categories of low-correlation assets. This indicates that most young "yield collectors" are not betting everything on dividend assets but are diversifying risk through allocation strategies. Industry observers believe the popularity of "yield formulas" reflects a fundamental shift in young people's investment philosophy: in an environment of low interest rates and high volatility, they no longer chase short-term high returns but instead pursue sustainable cash flow returns while managing risk through diversified allocation.