Kospi Companies' Dividends More Lucrative Than Government Bonds... Last Year's Average Dividend Yield 2.3%

Higher than government bond yields for 5 consecutive years
Total dividends amount to 20.7 trillion KRW... Dividend per company is 39.2 billion KRW

Provided by Korea Exchange

[Asia Economy Reporter Minwoo Lee] Last year, the average market dividend yield of KOSPI companies recorded 2.3%, marking the fifth consecutive year it remained higher than the government bond yield.

The Korea Exchange announced on the 23rd that it analyzed the recent five-year cash dividend performance, market dividend yield, payout ratio, and stock price fluctuation rates of December fiscal year-end corporations listed on the KOSPI market, resulting in these findings.

The survey showed that among the 528 companies that paid dividends last year, the average market dividend yield was 2.30% (based on common stock), the highest in the past five years. It has continuously risen, exceeding 2% for two consecutive years. It also surpassed the government bond yield (1-year maturity average) for five consecutive years. Last year, the gap with the government bond yield widened to 0.78 percentage points, the largest difference recorded.

The proportion of companies whose market dividend yield exceeded the government bond yield also increased. From the previous 50% range, it surged to 63% last year (333 out of 528 companies paying cash dividends). A total of 131 companies exceeded the government bond yield for five consecutive years. Their average market dividend yield was 3.66%, showing an excess return of 2.15 percentage points compared to government bonds.

The total dividend amount decreased for the second consecutive year. Among 761 listed companies with December fiscal year-end last year, 528 companies (69%) paid cash dividends, with a total dividend amount of 20.6903 trillion KRW (including preferred stock). This is about 500 billion KRW less each year compared to 21.8085 trillion KRW (537 companies) in 2017 and 21.3038 trillion KRW (545 companies) in 2018. However, the average dividend per company was 39.2 billion KRW, similar to 39.1 billion KRW the previous year.

Provided by Korea Exchange

Meanwhile, among the companies paying cash dividends in 2019, 94% paid dividends for two or more consecutive years. The proportion of companies with consecutive dividends increased from 91.9% the previous year. Among them, 77% (406 companies) paid cash dividends for five consecutive years.

Despite deteriorating earnings, the trend of increasing dividends is becoming established. The Exchange commented, "Although the total net income of all dividend-paying companies (limited to those subject to payout ratio) decreased by about 38% compared to the previous year, the average dividend per company was maintained at the previous year's level, resulting in a sharp increase in the 2019 payout ratio to 41.25%. This reflects a high interest in shareholder returns and companies' efforts to maintain stable dividend policies." It added, "It appears that an investment environment is being created where investors actively consider dividend investing."

This content was produced with the assistance of AI translation services.