Korea Inc. nearly triples dividend payments in decade

Cash dividend payments by companies listed on the Korea Exchange, the country's main bourse, have nearly tripled in a decade. They have returned a larger portion of profits to shareholders under a new generation of executives and the state-led initiative to boost their value through shareholder-friendly steps.

Their dividend payouts against net profits exceeded that of the US and Japan last year after narrowing the gap since 2021.

According to the Korea Listed Companies Association, companies listed on the Kospi paid a total of 41.2 trillion won ($30 billion) in cash dividends in 2023. That compares with 15 trillion won in 2014.

A total of 558 firms, or 70% of Kospi-listed companies, paid cash dividends in 2023, up from 483 in 2014.

The sum of cash dividend payments by Kospi-listed firms had hovered at 41 trillion won over the past couple of years after hitting the 40-trillion-won mark in 2020.

PAYOUT RATIOS

Their average payout ratio increased to 40% in 2023, higher than 37.1% for US stocks; 36.1% for Japanese stocks; and 30.5% for Chinese stocks, according to the MSCI index compiler.

In 2014, Korean companies returned on average 26.4% of their net income to shareholders in dividends.

By comparison, the payout ratio for US stocks slid to the 30% level over the past three years after hovering at 40% to 50% in the 2010s.

While the dividend payout ratio of Japanese stocks stood at about 36% since 2022, Chinese firms cut dividend payments by 1.9 percentage points to 32.4% of net income over the same period.

SAMSUNG, HYUNDAI

Samsung Electronics Co., Korea’s most valuable company, paid the most in cash dividends among Korean stocks. It handed out an average of 8.5 trillion won annually to shareholders in cash over the past 10 years.

Hyundai Motor Co. came second, paying 3.0 trillion won in cash dividends last year.

Its sibling Kia Corp, KB Financial Group and Shinhan Financial Group also ranked high on the list, elbowing out SK Innovation Co., Korea Electric Power Corp. and S-Oil Corp. which had paid handsome dividends in the 2010s.

The country’s top 20 companies on the dividend payout list distributed a total of 9.7 trillion won in cash dividends in 2014. Last year, that sum soared to 26.8 trillion won.

The top 20 accounted for 65% of Korean companies’ cash dividend payments, up from 62% in 2014.

INTERIM DIVIDENDS

A larger number of Kospi-listed companies have introduced interim dividends. A record 72 companies paid interim dividends in 2023, compared with 26 in 2014.

They distributed a record 13.7 trillion won in interim dividends in 2023, more than triple the 431.5 billion won paid in 2014.

For the January-March period, a record-high 21 companies listed on the main Kospi bourse and the junior Kosdaq paid a record 4.7 trillion won in quarterly dividends.

Hong KiHoon, a professor in the College of Business Administration at Hongik University, said that the dividend payment increase suggests Korean companies had not found the right place to invest.

"The government's continuous push to expand shareholder returns also seemed to affect their dividend policy," he added.

The average dividend yield for Korean stocks — or dividend income against stock prices — climbed to 2.97% in 2023, compared with 1.71% in 2014.

That was still below the yield of Korea's one-year treasury bonds of 3.43% last year. 

Write to See-Eun Lee at see@hankyung.com
Yeonhee Kim edited this article