To get in on the hottest equity trade in China right now, you’ll have to be quick.

Dividends are emerging as a key lure for investors in the world’s second-largest share market, with stocks of companies that consistently hand out the most cash outperforming the Shanghai Composite Index by the most since 2013. The catch? These plays are few and far between with China renowned as one of the stingiest markets globally when it comes to shareholder payouts.

“What we’re finding fascinating is the whole yield story in China — you’d never think investors would look at China for dividends,” Catherine Yeung, an investment director at Fidelity International, which manages about $290 billion, said in a Bloomberg TV interview. “This trend is likely to continue and it’s going to bode well for these companies from a foreign investment perspective.”

market usurper

Despite this historic reluctance to embrace dividends, China has emerged as one of the best dividend trades this year, with Chinese payout stocks outperforming the market more than those in the U.S. and Europe, where yield has been popular since the global financial crisis.

Investors have long pushed for better yields from Chinese equity markets, which are dominated by state-run companies not necessarily attuned to the demands of international shareholders. More than a quarter of companies in the Shanghai Composite didn’t announce a dividend in their most recent results, while those that do pay shell out an average 35 percent of their profits to shareholders, compared with 79 percent for European companies and 57 percent globally, data compiled by Bloomberg show.

What’s changed is the government’s attitude. Beijing is urging state-owned enterprises to focus on dividends as part of a wider restructuring of SOEs. The securities regulator will “talk to” listed companies that don’t pay dividends but are capable of doing so, spokesman Deng Ge said March 31. “Tough measures” may be employed against them, he said.

Market Speculation

The pressure seems to be paying off.

State-run China Shenhua Energy Co., the country’s biggest coal miner, caused a stir last month when it issued a special dividend, spurring a 10 percent surge in its mainland-traded shares and fueling speculation over which companies could be next.

For fund manager Lilian Leung, yield is unseating the economy as a reason to buy into Chinese stocks.

“Many of these companies just started paying dividends,” said Leung, who manages JPMorgan Asset Management’s China Income Fund from Hong Kong. “As the economy slows, there’s a greater understanding that these strategies work in Asia too, and that China isn’t just about growth.”

Analysts have been upgrading growth forecasts for China — read more here.

winning trade

Chinese dividends haven’t escaped the attention of investors outside the region, either.

Matthews International Capital Management LLC set up as many as 3,000 meetings last year to discuss dividend policies with companies in China, said Sherwood Zhang, a money manager at the San Francisco-based firm, which oversees about $26 billion.

“Finding companies that pay sustainable dividends is more about willingness,” Zhang said. “They still want to preserve capital, and think you shouldn’t care about dividends if you believe in growth.”

Jefferies Group LLC is doubtful the market will see more dividend maneuvers like Shenhua’s, and other investors have suggested the special payout was more about its parent company’s need for cash following a downturn in the coal industry. China Mobile Ltd., which some analysts tipped as capable of a Shenhua-like move, saw more than $8 billion of its market value wiped out after its dividend disappointed investors last month.

The danger when it comes to the Chinese dividend play is that it could attract income-starved investors looking for bond proxies. They could then dump the shares when yields rise, said Robert Davis, who manages NN Investment Partners BV’s emerging-market dividend fund in Brussels.

While policy tightening poses a threat to dividend trades, China has cheap valuations on its side, according to Davis. The Shanghai Dividend Index, composed largely of banks, utilities and industrial companies, trades at 9.7 times estimated earnings, 26 percent below the benchmark, data compiled by Bloomberg show.

“It’s an idea that actually is quite well suited to this point in emerging markets,” said Davis, who counts China as his fund’s largest geographical allocation. “China will be a more fertile hunting ground for dividends.

This article originally appeared on Bloomberg Markets.