Korean firms' dividend payouts forecast to stay low this year: data

By 정주원
  • Published : Jul 14, 2014 - 10:16
  • Updated : Jul 14, 2014 - 10:16
Dividend payouts by South Korean listed firms are expected to remain low this year compared with their foreign rivals, although their average dividend yield ratio may creep up from last year, industry data showed Monday.

The average dividend yield ratio of listed firms that trade on the country's main bourse is estimated at 1.25 percent for the year, compared with last year's 1.18 percent, according to the data.

The dividend yield ratio refers to a company's annual dividend payments per share divided by its share price, or the ratio of returns investors receive per share. A low ratio usually means that a company is retaining cash or increasing capital spending.

Data from Bloomberg show the dividend yield ratio of the Dow Jones Industrial Average is estimated at 2.27 percent for the year.

The comparable figures for the S&P 500 Index, the FTSE 100 Index and the DAX Index were projected at 1.99 percent, 3.73 percent and 2.93 percent.

Some emerging markets were expected to post higher ratios, with the Shanghai Stock Exchange Composite Index and the Hang Seng Index of Hong Kong being estimated at 3.65 percent and 3.66 percent, the data showed.

"South Korean companies are stingy in paying out high dividends due to various reasons such as taxation, but one of the biggest problems is that institutional investors are not active in demanding (high dividends)," said Song Min-kyoung, a researcher at the Korea Corporate Governance Service.

Separate data compiled by Daishin Securities show that Samsung Electronics Co., the country's top market cap, posted a dividend yield ratio of 1.07 percent last year, which is far lower than Toshiba Corp.'s 1.88 percent.

Top refiner SK Innovation Co.'s 2.66 percent dividend yield ratio also trails behind Japanese refiner JX Holdings Inc.'s 3.09 percent. Hyundai Motor Co., the country's top automaker, posted a dividend yield ratio of 0.84 percent last year, compared with Toyota Motor Corp.'s 2.09 percent, the data showed.

But expectations are growing that local companies will increase dividend payouts on growing calls from shareholders.

Samsung Electronics has recently come under pressure to pay more dividends or buy back its shares. The company is sitting on some 57 trillion won ($55.8 billion) in cash and cash equivalents.

Also, a new finance minister nominee said last week that the government will induce cash-rich local companies to pay out more dividends so that households can have more dispensable income. (Yonhap)