Dividend Ratio
The Korea Exchange announced on April 18 that KOSPI-listed companies settling their accounts in December paid 19.1 trillion won in dividend last year. The ratio of the dividend to their common stock value reached an average of 1.74%, exceeding the one-year treasury bond yield for the first time in five years by a margin of 0.042 percentage points.
According to the Korea Exchange, the corporations that paid dividends showed stock price fluctuations greater than the fluctuations of the KOSPI in the past five years. Last year, they achieved a profit equivalent to 26.2 percentage points, a five-year high.
It was Samsung Electronics and the Korea Electric Power Corporation (KEPCO) that paid the largest dividends last year. The KEPCO posted a current net income of more than 13 trillion won by selling its buildings and land in Samsung-dong, Seoul and decided to pay 1.99 trillion won in cash dividend, up 520% from a year earlier and the largest in its history.
“At present, the National Pension Service is actively exercising its rights as a shareholder with regard to the dividend issue as is the case with foreign investors,” said Mirae Asset Daewoo Securities research analyst Kim Sang-ho, continuing, “Under the circumstances, the overall dividend amount is likely to increase this year, led mainly by the companies in such sectors as oil refining, chemical and steel.”
Hyundai Securities analyst Kwak Byung-yul added, “These days, dividend payment does more good than harm to largest shareholders in many cases as South Korean enterprises’ corporate governance structures are becoming increasingly transparent and the enterprises themselves seem to be changing their thoughts after witnessing rises in stock prices based on dividend payment.”