Listed firms pay out handsome dividends for shareholder return

By Lee Kyung-min

Listed firms paid out handsome dividends in 2019 ― in a move to give investors more value by strengthening shareholder return policies, data showed Sunday.

The shareholder interest-bolstering policies follows heightened scrutiny of corporate entities amid the widespread adoption of a stewardship code, a set of rules applied to firms that manage assets on behalf of institutional shareholders to engage in corporate governance which is in their interest.

Korea's National Pension Service (NPS), the world's third-largest pension fund with about 700 trillion won ($586 billion) under management, said in guidelines adopted in 2019 that there would be consequences for firms that did not have a reasonable dividend policy or fail to follow existing policy.

However, according to FN Guide, a financial data service provider, while Korea's 137 listed firms paid over 21.3 trillion won in dividends last year, this was 3.18 percent down from 2018.

But this came as companies saw their combined net profit nearly halve to 58.5 trillion won, down 42 percent from 101.4 trillion won a year before.

This led to a jump in the payout ratio ― measured by total dividend divided by net profit of a company ― to 36.2 percent in 2019, up 14.51 percentage points from 21.7 percent in 2018.

Some firms increased the dividend payout despite a net profit decrease or a net loss in the worst cases.

Among the 16 such firms, Naver Corp., operator of online platform Naver, increased its dividend payout to 54.7 billion won, up 19.14 percent, despite a 36.81 percent net profit decrease to 396.8 billion won. It said it would cancel 550,000 shares worth 98.2 billion won.

SK Telecom, Korea's leading wireless telecommunications operator, saw its net profit drop over 72 percent from a year earlier to 861.9 billion won last year. Yet it increased its dividend payout by 1.76 percent from a year earlier to 730.1 billion won.

Bukwang Pharm. increased dividends to 12.2 billion in 2019, compared to 9.8 billion won in 2018. The 24.72 percent rise came despite a net loss of 7.3 billion won last year, a steep fall from a net profit of 145.7 billion won in 2018.

Twenty-four firms maintained the same level of dividend payout despite a poor performance.

Samsung Electronics logged a net profit of 21.7 trillion won in 2019, down 50 percent from a year earlier, but paid 9.6 trillion won in dividends, the same as 2018.

This is in line with the corporate shareholder return policy reaffirmed in a conference call Jan. 30.

The company said investors would be given 9.6 trillion won in annual dividends over three years (2018-20), while half the firm's cash-flow surplus would also be returned to them.

Samsung's key subsidiaries ― Samsung C&T Corp, Samsung Life Insurance and Samsung SDI ― reported around a 40 percent drop in net profit last year, but their dividend paid out was the same as 2018.

SK networks paid 28.9 billion won in dividends, the same as 2018, despite reporting a net loss of 122 billion won last year.