Listed companies recorded a significant increase in their cash dividends.
According to the KRX, 746 listed companies pay cash dividends for 2015 business results from December 2015 to February 2016. The figure is up 7.5 percent from 694 a year before. The cash dividends added up to 17,905.9 billion won, an increase of 28.1 percent from 13,974.5 billion won a year earlier.
The sharp increase in cash dividends is attributable to the fact that the government pushed ahead with such policies as urging companies to spend more money by introducing the reflux taxes on corporate profits while shareholders demanded more dividends.
The reflux taxes on corporate profits are imposed on money that is not used for paying dividends or ramping up investment and wages. The tax policy will go temporarily until next year for three years in order to make companies release money and thereby stimulate the economy.
The policy takes advantage of the point that companies have no choice but to increase dividends or investments since more taxes will be laid on their reserves.
Under these circumstances, increased free cash flows (cash flow from operating activities - investment in facilities) brought relatively sufficient sources of money to companies. “Cumulative cash flows totaled 27.2 trillion won in the third quarter of last year, already surpassing last year’s volume (about 20 trillion won),” said Cho Seung-bin, a researcher at Daeshin Securities.” “Slackened investment led to an increase in cash that could be used for paying dividends rather than earnings rose sharply.”
By market, the number of KOSPI-listed companies that announced to pay cash dividends jumped to 380 from 350 a year before and the volume of their dividends grew 29.1 percent year on year. The number of such KOSDAQ-listed companies grew to 366 from 344 in the same span. The volume of their dividends grew 12.1 percent year on year.
Last year, the biggest cash dividend was paid by Samsung Electronics which paid 2,919.8 billion won in dividends. The Korea Electric Power Corp, which posted 13 trillion won in net income thanks to the sell-off of the land of its HQ building, placed second by deciding to pay 1.99 trillion won in dividends, the highest-ever in its history. The volume of its dividends grew 530 percent from 320.9 billion won a year earlier.
The top ten list includes Hyundai Motor (810.8 billion won), SK Telecom (635.4 billion won), Shinhan Financial Group (630.9 billion won) and POSCO (479.9 billion won).