Financial Sector DY Rising
The author is an analyst of NH Investment & Securities. He can be reached at junsup@nhqv.com. -- Ed.
Amid recent stock market volatility, investor interest in dividends is rising. With financial sector stocks already well known as being attractive dividend plays, we see record-high 2021E DY in line with higher earnings.
Financial sector DY rising
The financial sector (banking, insurance, and securities) should show sharp DY hikes, given: 1) 2021E earnings improvement; 2) sluggish share prices; and 3) the absence of regulations or capital issues that might infringe upon DPR.
2021E DY: Banking industry 5.1~7.3%; insurance and securities players also look attractive
[Banking] This year, banking players are enjoying historically-high earnings and ongoing NIM improvement. With the exception of Kakao Bank, banking firms’ 2021E DY figures should prove above than 5%(on an annual DPS basis)—WFG to be atop with 7.3%, followed by HFG (6.4%), IBK (6.3%), BNK (6.1%), DGB (6.1%), and JBFG (5.9%).
[Securities] Backed by robust earnings at their retail and IB domains, most securities players should report record-high earnings and DY for 2021E. We anticipate a strengthening in 2H21E earnings consensus. Among the major securities firms, Samsung Securities (7.6%), NH I&S (preferred6.9%; common 6.5%), and KIH (preferred 6.0%) will likely all display high DY.
[Insurance] We believe that non-life insurance players will record improved combined ratios on both benefits from the Covid-19 crisis and sound expense ratios. We expect life insurance firms to book sizable one-off gains and reversal of variable insurance guarantee reserves. Among non-life insurance companies, Samsung F&M’s 2021 DY should be the highest (preferred 7.8%; common 5.8%), followed by Hyundai M&F (5.3%), and DB Insurance (4.5%). As for life insurance players, DY is to be lofty for both Tongyang Life (5.9%) and Samsung Life (4.7%).