Buy Dividend Stocks in November... Promising Picks Include Kia, POSCO, Meritz Fire & Marine Insurance

[Asia Economy Reporter Lee Seon-ae] As dividend stock shopping intensifies in November, there is a growing consensus in the securities industry that investors should selectively invest in high-performing stocks among high-dividend stocks.

According to Shinhan Financial Investment on the 6th, an analysis of the past four years shows that the excess returns of dividend stocks compared to the KOSPI in November were favorable except for 2020. The KRX High Dividend 50 Index posted an average excess return of 2.8% over the KOSPI in November from 2017 to 2019.

Researcher Lee Jung-bin of Shinhan Financial Investment advised, "There is a high likelihood that demand will concentrate on dividend stocks from early November until the ex-dividend date this year," adding, "Dividend stock investment is an excellent strategy for protecting returns even during periods of high market volatility."

He added, "However, dividend stocks should also be selected carefully," emphasizing, "Among dividend stocks, attention should be paid to those whose 1-month and 3-month earnings per share (EPS) changes and next year's operating profit growth rate are all positive, and whose next year's return on equity (ROE) exceeds 10%."

Among the KRX High Dividend 50 Index components, he recommended Kia, POSCO, Korea Zinc, LG Uplus, Coway, Meritz Fire & Marine Insurance, S-1 Corporation, Lotte Fine Chemical, Golfzon, and Halla Holdings.

Looking at the sector composition of the KRX High Dividend 50 Index, excluding Samsung Electronics, financials account for the largest share at 60%, followed by materials at 18% and industrials at 13%. Within financials, banks, insurance, and securities make up 57%, 26%, and 17%, respectively.

Researcher Lee explained, "Banks tend to have high dividend yields because their annual cash dividends per share (DPS) are substantial," adding, "Since stock prices move with dividend expectations until the ex-dividend date, financial stocks are also an attractive investment alternative," and further noted, "Among the overlapping stocks included in the aforementioned dividend ETFs, Meritz Fire & Marine Insurance stands out."

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