April is also a good season for dividend stocks... Foreigners and pension funds "are already holding early"

[Asia Economy Reporter Lee Seon-ae] Typically, the market views September to October, ahead of year-end dividends, as the optimal period for dividend stock investment. However, an analysis revealed that the highest returns occur in April, when dividends are received and reinvested. Foreign investors and pension funds, who are highly interested in dividend stock returns, have already positioned quality dividend stocks in their portfolios.

According to the Korea Exchange on the 31st, the top net purchase stocks by foreigners from the beginning of this month until the day before were POSCO, KB Financial Group, TIGER MSCI Korea TR, SK Telecom, Shinhan Financial Group, NCSOFT, Samsung Fire & Marine Insurance, KODEX MSCI Korea TR, Hana Financial Group, and HMM, in that order. Pension fund portfolios also include Amorepacific, Hyundai Steel, Kumho Petrochemical, POSCO, Korea Shipbuilding & Offshore Engineering, Hite Jinro, Samsung Biologics, SK Bioscience, GS Engineering & Construction, and KT, respectively.

SK Telecom, Hana Financial Group, KT, and POSCO are among the quality dividend stocks recently selected by many securities experts. Additionally, KB Financial Group is considered one of the top five stocks with large dividend payouts, alongside Samsung Electronics, SK Hynix, Hyundai Motor, and POSCO.

On the previous day, the KOSPI High Dividend 50 Index closed at 2,617.88, up 0.89%. It has risen 15.31% since the beginning of the year. Despite the market stagnating in March, it rose 10.95%, showing strength compared to the market. This trend contradicts the conventional view that dividend stocks weaken during periods of rapidly rising interest rates due to reduced dividend appeal. Lee Jae-seon, a researcher at Hana Financial Investment, explained, "This is because the appeal of dividend stocks has actually increased during volatility driven by growth stocks," adding, "In fact, dividend stocks showed higher returns than the KOSPI during volatility surges in 2015, 2016, 2018, and 2021."

He particularly considers April, which attracts attention from foreigners and pension funds, as the best time for returns and thus an optimal investment period. The researcher emphasized, "Dividend stock investment strategies are appropriate in the current phase," noting, "Since 2014, the average April return of the KOSPI was 3.1%, but the KOSPI 200 High Dividend Index was higher at 4.7%, showing the best returns." Except for July (1.7%), September (1.3%), October (1.3%), and November (1.7%), the monthly average returns of the KOSPI 200 High Dividend Index were all negative.

The profit growth trend of domestic listed companies also enhances the appeal of dividend stocks. The consensus net profit for the KOSPI this year (average estimate by securities firms) is 137 trillion won, a 62.2% increase from last year. With corporate profits rising, dividend payouts are likely to increase proportionally. Moreover, although domestic companies have been passive about expanding dividends, this year marks a turning point.

In fact, the estimated dividend amount for KOSPI-listed companies has been on an upward trend compared to the beginning of the year. The dividend growth rate this year is expected to rise 5.6% year-on-year to 31.8 trillion won. Free Cash Flow (FCF), which refers to the cash remaining after taxes, operating expenses, and capital expenditures, is a representative indicator of dividend capacity. This year, KOSPI FCF is improving even excluding Samsung Electronics, which holds the largest share.

Hana Financial Investment recommended 18 dividend stocks with strong dividend appeal. These were selected based on exceeding the past three-year KOSPI 10-year average dividend yield (1.53%), having a dividend payout ratio of over 20%, and expected increases in cash dividends and net profits for this year and next. The stocks include SK Telecom, Hana Financial Group, KT&G, Samsung Fire & Marine Insurance, KT, Samsung Card, Cheil Worldwide, KEPCO KPS, Huchems, Samsung Electronics, Hyundai Motor, POSCO, Hanon Systems, Coway, Ssangyong Cement, KPX Chemical, Eco Marketing, and Chungdahm Learning.

SK Telecom and Hana Financial Group, classified under the KOSPI 200 High Dividend and interim/quarterly dividend themes, are expected to have cash dividend yields of 3.8% and 5.8%, respectively, this year. KT&G and KT, classified under the KOSPI 200 High Dividend theme, are expected to yield 6.0% and 5.0%, respectively. POSCO, classified as an interim and quarterly dividend stock, is expected to have a cash dividend yield of 3.0%.

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