Investors Bullish on Samsung Electronics
The stock price of Samsung Electronics rose 17.84 percent last month alone. The rally was based on expectations for DRAM price recovery, strengthening of its foundry business unit, increasing demand from foreign investors and increased dividends. This year in particular, the company is expected to give special dividends.
Samsung Electronics already announced that it would beef up shareholder return policies by special dividends, share buyback, and so on. The three-year plan was announced on Oct. 31, 2017. Specifically, it said that dividends would be equivalent to at least 50 percent of its free cash flow for 2018 to 2020 and additional cash dividends or share buyback and cancellation would follow in the event of extra financial resources.
According to Meritz Securities, a special dividend of 1,380 won per share is possible at the end of this year. The three-year free cash flow is estimated at 76.35 trillion won and 28.8 trillion won was already paid in quarterly dividends. The number of Samsung Electronics shares in the market is 6,793 million.
Samsung Electronics vice chairman Lee Jae-yong’s inheritance tax issue is adding to the expectations, too. The equity value he is supposed to inherit from his late father is over 20 trillion won and his inheritance tax is over 11 trillion won at the current stock price. The vice chairman owned 42,020,150 Samsung Electronics shares at the end of the third quarter. He can receive 57.9 billion won in dividends if the dividend per share is 1,380 won.