Stock market Illustration: VCG

In a significant development for China's stock market, more than 200 A-share companies had announced cash dividend plans for the third quarter as of Monday, as policies to support the healthy development of the capital market take effect.

Regulatory encouragement and investor interest in higher dividends are motivating listed companies to boost their dividend payouts in order to enhance investor confidence, experts said.

As of Monday, 219 listed companies had disclosed cash dividend proposals, with a combined total of 31.18 billion yuan ($4.3 billion) earmarked for distribution, the Securities Daily reported, citing financial information service provider Wind.

Compared with previous years, this year's increase in both the number and frequency of dividends represents a notable shift within the A-share market. In the third quarter, the number of companies declaring dividends hit a multi-year high, according to the report.

This surge in dividend announcements reflects a broader trend in the A-share market, where companies are increasingly recognizing the importance of returning value to shareholders, said the China Association for Public Companies said on Monday.

The association said that under the guidance and encouragement of government policies, listed companies have been improving their cash dividends this year.

As of October 31, the number of listed companies announcing cash dividend plans in their third-quarter reports was up 273 percent year-on-year. The total expected dividend amount surged 72 percent, with five companies planning to distribute more than 1 billion yuan, according to the association.

Listed companies' increased enthusiasm for dividends is primarily driven by the active encouragement of regulators. Companies with higher dividend levels tend to attract more investors, and this market feedback encourages those companies to enhance their dividend payouts, Xi Junyang, a professor at the Shanghai University of Finance and Economics, told the Global Times on Tuesday.

"For investors, stable dividends represent tangible cash returns that directly boost their wealth and enhance their confidence," Xi said.

Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies at Renmin University of China, told the Global Times on Tuesday that generally speaking, mature companies that consistently offer dividends are an important factor in making the market more appealing to investors.

In April, China's State Council, the cabinet, released a guideline on strengthening regulation, forestalling risks and promoting the high-quality development of the capital market.

It urged tighter regulation of cash dividend payments by listed firms. Incentives will be increased for companies with strong dividend performances, and various strategies will be employed to boost dividend yields. Efforts will focus on enhancing the stability, sustainability and predictability of dividends, and promoting multiple dividend distributions within a year, according to the guideline.