Hyundai Motor to increase dividends

By Park Jin-hai

Hyundai Motor confirmed on Wednesday that it will increase dividends to boost shareholder’s profits for this year.

However, the firm did not disclose the exact extent of the dividend hike.

“To boost shareholder’s value, we have been buying back our own shares from last month. In the same context, we have decided to increase dividends,” said the company in a public notice filed with the Korea Exchange.

When it is approved through the board of directors and general shareholders’ meetings, dividends will be paid to shareholders early next year.

The mid-term dividend payment has been positively reviewed, said the company.

Hyundai Motor has been signaling several times that it will raise the dividend payments sharply, as part of its shareholder-friendly policy, after investors turned their backs upon the company’s controversial 10.5-trillion land purchase from KEPCO.

To appease shareholders, Hyundai Motor and Kia Motors have been buying back shares worth a combined 670 billion won since November.

After an announcement by Samsung Electronics last week to lift its annual dividend payments this year by up to 50 percent, multiple local newspapers reported that Hyundai Motor has been considering double the dividend up to 4,000 won for a share.

Last year, Hyundai Motor paid 1,950 won for each share which Hyundai Motor’s institutional investors including the National Pension Service regarded as extremely low.

Cho Soo-hong, an analyst at Woori Investment & Securities, predicted that the dividend payment rise will be similar to that at Samsung Electronics.

“For years its dividend yield has remained slightly over 1 percent. If it raises dividend payment to the level of Samsung’s, it will have over 3,000 won or upper 1 percent dividend yield,” he said.

Cho added that to expect any meaningful market response, dividend should be raised over 3,000 won.

When dividend is raised to 4,000 won, Hyundai Motor’s dividend yield will stand at 2.3 percent.

Samsung’s dividend yield after the planned hike has been estimated to go up to 1.7 percent this year from last years’ 1.4 percent.

Woori Investment & Securities forecast Hyundai Motor’s fourth quarter sales at 23 trillion won, with operating profit of 1.94 trillion won.

KB Securities and Investment said that Hyundai Motor’s shareholder-friendly policy including dividend payment raise this time will contribute to lifting the company’s valuation.

Hyundai Motor shares closed sharply higher on expectations of the company paying greater dividends.

The stock closed up 2.04 percent or 3,500 won at 175,000 won. The benchmark KOSPI closed up 0.39 percent or 7.59 points at 1,946.61.

The company announced the plan to increase dividends after the market closed.