Concern over Enervation of Growth Potential
Dividend payments to shareholders by listed Korean companies based on earnings last year are expected to exceed 30 trillion won (US$27 billion). Analysis says that the dividend size shot up as listed Korean companies chalked up the best-ever business performances and investors demanded more return.
According to the financial information company F&G Guide on March 1, total cash dividends (including interim dividends) of 739 listed companies which announced dividend payment plans for 2017 by February 26, was 24.212 trillion won (US$21.7 billion), up 25.8 percent from the previous year's total dividends of 19.249 trillion won (US$17.3 billion).
High-ranking companies in terms of market capitalization such as number-one Samsung Electronics (the growth of 46.0 percent), SK Hynix (54.0 percent), Naver (30.4 percent) and KB Financial Group (54.0 percent) ballooned the amounts of their dividends. Combining dividends of about 300 companies that have not yet announced their dividend plans, the total amount of dividends of listed Korean companies will surpass 30 trillion won (US$27 billion) last year to hit a new record high according to those in the securities industry.
The amount of dividends of listed Korean companies has been on the rise every year since 2012. The total figure which was 14.276 trillion won (US$12.8 billion) in 2012, rose to around 24.521trillion won (US$22.0 billion) in 2016, nearly 70% in four years.
Some experts also worry that dividends are growing too sharply. For the past three years, the dividend per share of listed Korean companies has increased an annual average of 15.85%. The figure is more than double the global average (7.02%). "Korean companies have compensated shareholders by growing themselves through aggressive reinvestment and thereby raising their share prices instead of dividends, which are short-term profits," said Yoo Hwan-ik, head of the Innovation and Growth Office at the Korean Economic Research Institute (KERI). “Too high dividends may enervate companies’ growth potential.