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Korean Companies Maintaining Relatively Lower Dividend Payout Ratio
Miserly Chaebol
Korean Companies Maintaining Relatively Lower Dividend Payout Ratio
  • By Jung Suk-yee
  • June 3, 2015, 11:00
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Bloomberg announced on June 2 that Korean companies recorded an average dividend payout ratio of 16.75 percent as of the end of the preceding month to rank the lowest among the 51 countries it surveyed. Korea was the only country where the ratio was below 20 percent, while the percentage amounted to 72.87 percent for Czech companies, for instance.

They were followed by those in Australia (70.91 percent), Finland (69.07 percent), New Zealand (65.49 percent), and Britain (63.36 percent). American companies ranked 42nd, with a payout ratio of 35.87 percent. In Asia, Taiwan (47.69 percent) took 24th place and was followed by Thailand (46.05 percent, 28th), Indonesia (37.42 percent, 39th), Hong Kong (37.18 percent, 40th), China (31.57 percent, 43rd), and Japan (27.96 percent, 47th).

The dividend payout ratio shows how much is paid in dividends out of corporate profits to shareholders. It is calculated by dividing cash dividend by current net income.

It is said that the lower dividend payout ratio of Korean companies is because of their conservative dividend payment policy for coping with low growth and increasing uncertainties. These days, many of them are trying to pile up reserves while refraining from investment. Their payout ratio had been at 14.91 percent and 13.13 percent at the end of last year and one year ago, respectively.