By Park Jin-hai
Hyundai Motor Group is expected to raise dividend payouts by a large margin, following Samsung Electronics which announced it was considering a 50 percent dividend hike from last year, analysts said Monday.
“For Hyundai Motor, there are expectations in the market for higher dividend payouts of over 3,000 won per share. Last year, it paid 1,950 won for each share, which was much lower in comparison to other companies,” said Kim Jin-seong, an analyst at Meritz Securities.
Hyundai Motor Group’s dividends payout, with the exception of its affiliates that recorded deficits, was 5.96 percent last year, while Samsung Group’s was 8.47 percent.
Hyundai Motor’s ratio of dividend to profit marked 5.94 percent, while its smaller sister firm Kia Motors and automotive parts maker Hyundai Mobis reached 7.43 and 5.49 percent, respectively.
Shin Chung-kwan, an analyst at KB Investment and Securities, also predicted that the dividend payout for Hyundai Motor will be more than 3,000 won this year, being the first in line among Hyundai Motor Group affiliates.
“Hyundai and Kia Motors will the first to raise their dividend payout, since their net profits are larger than other affiliates and in terms of brand value automakers are more in need of shareholder friendly policies,” he added.
On the heels of its 10-trillion won land purchase from KEPCO, Hyundai Motor’s share prices nosedived, dashing shareholders’ expectations for high dividend payouts.
However, institutional investors, including the National Pension Service (NPS) have been predicting this dividend hike.
To appease shareholders who turned their back on the company, Hyundai Motor and Kia Motors has been buying back shares worth a combined 670 billion won since November.
According to the NPS, local companies’ dividends payout averaged 15 percent in 2013. Samsung Electronics, if it raises its dividends payout by 50 percent, will also be around 15 percent from last year’s 7.08 percent.
Hyundai Motor’s Chief Financial Officer Lee Won-hee said last month that the company has been considering raising its dividend payout by a large margin and that it will also review the possibility of a mid-term dividend payout during an IR conference call.
The market was boosted by the upcoming dividend payout hikes. “When the No.1 and No.2 companies in market capitalization double their dividends, the overall local market’s dividends will rise by 20 percent, reviving the market,” said an Investment Bank official.
Hyundai officials confirmed the dividend hike, but refrained from giving further information.