[Finding Leading Stocks③] ‘True’ High Dividend Stocks Shining in a Downturn... Seek the Perfect Combination with Strong Earnings

The Most Stable Portfolio is 'Dividend Stocks'... Performance Variables Must Be Considered
Including Financial Holding Companies, S-Oil, Samsung Card, Korea Gas Corporation, KT&G, and More

Editor's NoteIt is truly a 'falling leaves in autumn' situation. The domestic stock market, which has entered a bear market characterized by simultaneous declines in stock prices and corporate profits, is losing vitality under downward pressure. However, there are 'hidden gems.' A bear market can present investment opportunities. Because stocks can be bought cheaply, it is important to seize opportunities where 'hidden gems' can become leading stocks. The answer lies in stocks with strong export indicators, those with excellent valuations (PER, PBR, ROE) that can yield profits through long-term investment, and high-dividend stocks that can generate stable earnings even in a weak market.

[Asia Economy Reporter Lee Seon-ae] Since volatility in the stock market is inevitable, the most stable portfolio construction investment strategy is to include dividend stocks. Among dividend stocks, if you want to pursue excess returns, investment advice suggests paying attention to 'real dividend stocks (performance + high dividend)' that have high dividend yields and are expected to show upward earnings revisions.

According to FnGuide on the 11th, among stocks with earnings forecasts from three or more securities firms, 31 stocks are expected to have an annual dividend yield exceeding 5% this year. The top five dividend yield stocks are banking stocks: BNK Financial Group (9.39%), DGB Financial Group (9.38%), JB Financial Group (9.36%), Woori Financial Group (9.03%), and Industrial Bank of Korea (8.50%). The 6th is Hyosung (8.48%), and the 7th is Hana Financial Group (8.25%). The key variable to watch here is earnings.

Lee Kyung-soo, a researcher at Daishin Securities, emphasized, "There is a high possibility that the decline in domestic corporate profits this year will continue into next year, which will reflect the scarcity of earnings stocks going forward. Adding high dividends to the earnings variable will create a stable model."

If earnings deteriorate, net income?the source of dividends?will decrease, making it difficult to pay dividends, so avoiding the 'earnings decline' variable is best. Among stocks expected to have a dividend yield of 5% or more in the past month by three or more securities firms, those with increased net income compared to the previous year and rising net income forecasts include JB Financial Group, Woori Financial Group, S-Oil, Samsung Card, KB Financial, Korea Gas Corporation, Shinhan Financial Group, and KT&G.

S-Oil's operating profit this year is expected to increase by 119.5% compared to the previous year. Hwang Kyu-won, a researcher at Yuanta Securities, stated, "Considering the tight global refining capacity and the possibility of a boom-level performance next year, a buying strategy below 100,000 KRW is valid for S-Oil." The expected performance for S-Oil next year is sales of 37 trillion KRW, operating profit of 1.8 trillion KRW (operating margin 4.5%), and net profit of 1.5 trillion KRW. He added, "Although operating profit is down from this year's peak of 4.7 trillion KRW, it still exceeds the past boom level of 1.6 trillion KRW. The year-end dividend appeal is also valid, with an interim dividend of 2,500 KRW followed by an expected year-end dividend of 8,250 KRW per share, resulting in a dividend yield of 8% at a stock price of 100,000 KRW."

Shinhan Investment Corp. recommended stocks with positive changes in 1-month and 3-month earnings per share (EPS) consensus, positive operating profit growth in 2022, and a return on equity (ROE) exceeding 10%. Currently, these stocks include Hyundai Motor, Kia, KB Financial, Shinhan Financial Group, Hana Financial Group, KT&G, Woori Financial Group, DB Insurance, Meritz Fire & Marine Insurance, and Hyundai Marine & Fire Insurance. Daishin Securities recommended Korean Air, Youngone Corporation, Kolmar Korea, Hyundai Marine & Fire Insurance, Shinsegae, Daeduck Electronics, LX International, DB Insurance, GS, Lotte Rental, Shinsegae International, HD Hyundai, and Symtek.

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