More South Korean companies join to pay quarterly dividends

[Photo by MK DB]

South Korea’s listed companies are expected to pay out record dividends for the first quarter, according to recent reports.

The increase in dividend payouts is attributed to the expansion of dividend payments by financial holding companies and the rise of activist funds pressuring more companies to enhance shareholder value. With companies like Hyundai Motor Co. changing their dividend payout schedule to quarterly starting in the second quarter of this year, it is expected that quarterly payouts will continue to increase.

According to the Korea Exchange on Monday, a total of 13 listed companies paid out quarterly dividends in the January-March period, amounting to 3.56 trillion won ($2.69 billion).

The size of quarterly dividends paid by Korean companies has been steadily increasing. The figure reached 2.63 trillion won in the first quarter of 2020, 2.78 trillion won in 2021 and reached a record 3.7 trillion won last year, exceeding 3 trillion won for the first time since the introduction of the quarterly dividend system in 2003.

The direct reason for the increase in quarterly dividends is the expansion of dividend payments by financial holding companies. After Shinhan Financial Group Co. began paying out quarterly dividends for the first time in the second quarter of 2021, KB Financial Group Co. also joined in the first quarter of last year. Hana Financial Group Co. also announced that it will pay quarterly dividends in the first quarter and Woori Financial Group Co. is expected in the second quarter, after implementing interim dividends prior to the quarterly dividend payout.

Samsung Electronics Co., which has paid quarterly dividends, announced that it will pay out 2.45 trillion won in dividends, equivalent to 361 won per share, for the first quarter. SK hynix Inc., which introduced quarterly dividends last year, plans to pay out 300 won per share, totaling 206.4 billion won for the first quarter.

However, experts pointed out that the quarterly dividend payout does not necessarily lead to an immediate increase in shareholder value.

“Despite the quarterly dividend payouts, shareholder return enhancement may be limited,” said Hwang Hyun-young, a research fellow at the Korea Capital Market Institute. “Companies should come up with specific plans, such as the percentage of dividends to be paid compared with the available earnings at the time of book closing, so that shareholders can easily understand the level of shareholder return.”