KOSPI Listed Companies' Dividends Down 7%... KOSDAQ Dividend Yield Falls Below Government Bond Yield for First Time in 7 Years

Last year, 7 out of 10 companies listed on the Korea Composite Stock Price Index (KOSPI) market paid cash dividends. However, the total dividend amount decreased by 7.1% compared to the previous year. Although the average dividend yield reached the highest level in the past five years, the rapid rise in interest rates last year meant there was little difference compared to government bond yields. The average dividend yield of KOSDAQ-listed companies fell short of government bond yields for the first time in seven years since 2015.

On the 19th, the Korea Exchange (KRX) analyzed the financial statements and cash dividend performance of companies with December fiscal year-end in the KOSPI market for 2022. Out of a total of 784 companies, 557 companies, accounting for 71.0%, paid cash dividends. The total dividend amount was 26.6 trillion KRW, down 7.1% from 28.6 trillion KRW the previous year. The number of dividend-paying companies was almost the same as the previous year (556 companies), but the dividend scale decreased. However, the dividend payout ratio remained similar to the previous year at around 35%.

Among all dividend-paying companies, 528 companies (approximately 94.8%) paid dividends for two or more consecutive years, an increase of about 2.7% compared to 514 companies the previous year. In particular, the number of companies paying dividends for five or more consecutive years increased by about 3.2% to 446 companies from 432 companies the previous year.

The average dividend yield was 2.70% for common stocks and 3.01% for preferred stocks, both the highest figures in the past five years. However, with the benchmark interest rate rising sharply in 2022, government bond yields recorded 2.65%, showing little difference from stock dividend yields. As a result, the number of listed companies whose dividend yields exceeded government bond yields dropped significantly from 444 in 2021 to 239 last year. This indicates an increase in cases where dividend yields failed to reach government bond yields.

Over the past five years, the industry with the highest average dividend yield was telecommunications at 3.61%, followed by finance at 3.43%, and electric and gas utilities at 3.15%.

A Korea Exchange official stated, "Despite the worsening business environment due to interest rate hikes, many listed companies have made efforts to return profits to shareholders and maintain stable dividend policies. Although 2022 was an unfavorable environment for dividend investment due to benchmark rate hikes, the upward trend in dividend yields of dividend-paying companies did not change." The official added, "The Exchange discloses dividend information such as dividends per share, payout ratios, and total dividend amounts of listed companies through the corporate disclosure website (KIND). We will continue to strive to promote dividends in the future."

Meanwhile, in the KOSDAQ market, the number of dividend-paying companies last year was 594, with a total dividend amount of 2.1774 trillion KRW. The number of dividend-paying companies slightly increased, while the total dividend amount decreased by 1.2%.

Notably, the average dividend yield of KOSDAQ-listed companies was 1.883%, which was a slight increase from the previous year but significantly below the 1-year government bond yield of 2.645%. This is the first time in seven years since 2015 that the average dividend yield of KOSDAQ has fallen short of government bond yields.

The Exchange commented, "Due to the interest rate hike, the average dividend yield of dividend-paying companies fell below government bond yields for the first time in seven years, but the stock price fluctuation rate of dividend-paying companies showed a better trend compared to the KOSDAQ index. The dividend-based investment environment in the KOSDAQ market is improving, and dividend-paying companies appear to be achieving excellent long-term performance."

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