South Korean companies with a higher ratio of foreign shares showed bigger growth in dividend payouts last year, data showed Monday, raising doubts as to whether the extra income from stock investments is going where the government intended.
  

Out of 1,719 listed companies, 885 offered cash returns worth 15.72 trillion won ($13.84 billion) for the fiscal year 2014, up 18.9 percent from the year prior, according to data compiled by market research firm WiseFN.
  

Dividends for 39 companies that are more than half-owned by foreigners soared 132.6 percent on-year to 5.6 trillion last year, while that for 1,619 companies with foreign stock ownership below 30 percent increased 18.9 percent to 6.4 trillion in the period, data showed.
  

The dividend increase comes despite sluggish earnings last year, on a push from the government demanding local firms give more back to investors so that they will have more money to spend and boost sluggish consumption.
  

Last year, offshore investors received a combined 5.68 trillion won in dividends paid by Korean companies, accounting for 35.7 percent of the total in the Seoul bourse, it said.
  

The dividend jump for foreign shareholders was driven by industry leaders.
  

Samsung Electronics, South Korea's top market cap with a 51.8 percent of its stakes held by offshore investors as of end-2014, paid 3 trillion won in cash returns to shareholders, a 39 percent hike from the previous year. 
  

Because of the large portion going out of the country, some market watchers question whether the government's dividend push would meet the intended goal of propping up the domestic economy.
  

"The benefit of the bigger dividends payouts is concentrated on foreign investors and large shareholders," said Kim Yoon-kyung, a researcher at the Korea Economic Research Institute, a Seoul-based think tank. "(The government's dividend policy) showed its shortcomings because financial income is mostly reinvested in shares rather than spending."
  

Despite the capital outflow from the local market, however, most see bigger dividend payouts as an inevitable trend for Korean companies faced with a slow growth path amid all-time low interest rates. The Bank of Korea last week cut the key interest rate to 1.75 percent, the lowest ever for the country. 
  

"It is controversial that foreign investors enjoy greater benefit of dividends, but Korean companies should expand dividends to boost the local equity market and raise the (dividend payout) ratio that is far below the international level," Kim Sang-yoon, a researcher at investment consulting firm Sustinvest, said.
  

Korean companies have been stingy in paying dividends, a key reason why their stocks are undervalued compared to their global peers. Their average dividend payout ratio stands at 22.4 percent last year, far below the average of 47.7 percent of other countries, according to the main bourse operator Korea Exchange. (Yonhap)