[Practical Finance] Buy 'Dividend Surprise' Stocks in Advance This Summer

Highest Dividend Yield in August Over 10 Years
Recognized as High-Dividend Sectors Like Securities and Automobiles
Stable Income Generation with 'Dividend Stock Funds' in Volatile Markets

With expected market volatility due to uncertainties in monetary policy and concerns over a global economic recession, 'dividend stocks' are attracting attention as an investment strategy this summer. Securities firms advise that it is effective to secure companies with a high possibility of a 'dividend surprise' during the summer.

When the cold wind blows? Dividend stocks when it starts to get hot

According to NH Investment & Securities on the 12th, over the past 10 years, dividend stocks in the KOSPI and KOSDAQ markets have shown the best performance in the third quarter. The average return of dividend stocks in August was 0.41%, the highest among the months. This was followed by July (0.26%) and June (0.16%). Historically, the stock market returns have been high in the third quarter, a phenomenon known as the 'summer rally,' which explains the favorable returns of dividend stocks during this period.

Jae-eun Kim, a researcher at NH Investment & Securities, said, "Attention is needed for dividend stock investments considering seasonality," adding, "It is necessary to focus on industries and companies where dividend surprises are possible and high dividend yields are expected." The securities industry advises focusing on sectors expected to have dividend yields significantly exceeding past averages this year or those with recently upwardly revised earnings forecasts. Representative sectors include the automobile and securities industries.

The banking sector is expected to have the highest increase in dividend yield compared to the 10-year average this year. The dividend yield for the banking sector is projected to reach 6.9% this year. The average dividend yield for banks over the past 10 years was 3.6%. Regional financial holding companies such as JB Financial Group (10.07%) and DGB Financial Group (10.04%) are expected to have dividend yields exceeding 10%. However, due to the recent controversy over the high proportion of real estate project financing (PF), many advise carefully examining financial soundness before investing.

The securities sector's dividend yield is expected to be 5.12% this year. Daishin Securities (8.89%) and Samsung Securities (7.52%) are expected to have the highest dividend yields. Tae-joon Jung, a researcher at Yuanta Securities, said, "Securities firms with low exposure to real estate risks and high dividend yields will show relatively strong stock performance," adding, "Kiwoom Securities, NH Investment & Securities, and Samsung Securities meet these conditions, so their stock prices are likely to rise relatively due to the overlapping effect of year-end ex-dividend dates."

Automotive parts companies, expected to benefit from the automobile industry's favorable conditions, are also listed among high-dividend stocks. The automobile sector's average expected dividend yield this year is 4.04%. In particular, Korea & Company is projected to have a dividend yield of 6.31%, and HL Holdings is expected to yield 5.45%.

'Dividend Stock Funds' in Volatile Markets

Dividend stock funds are also considered popular investment options in volatile markets. As the stock market shows a sluggish trend due to global economic uncertainties, large sums of money have recently flowed back into dividend stock funds, which can provide stable returns, reflecting this strategy.

According to financial information provider FnGuide, over the past month, a total of 330.1 billion KRW has flowed into 276 domestic dividend stock funds. Considering that 314.3 billion KRW was withdrawn from 992 equity funds during the same period, dividend stock funds have uniquely attracted investors' attention.

The securities industry expects that safe assets like dividend stock funds will continue to perform well during the short-term adjustment phase of the stock market. Gyun Jeon, a researcher at Samsung Securities, explained, "In a high-volatility phase, dividend stock funds can pursue stable income," adding, "Investing in dividend stock funds is advantageous in a box range or a gentle upward market."

Gwang-young Oh, a researcher at Shin Young Securities, predicted, "With improved dividend policies by financial authorities allowing investors to reliably compare corporate dividends, companies are likely to increase their dividend payout ratios," adding, "Accordingly, foreign investment will expand, benefiting dividend stock funds."

Recently, covered call exchange-traded funds (ETFs) have gained attention. The covered call strategy involves buying stocks and selling call options, sacrificing some upside gains in exchange for option premium income. Domestic covered call ETFs mainly pay monthly distributions (dividends), attracting significant interest from individual investors. In particular, 'KBSTAR 200 High Dividend Covered Call ATM' invests in 50 high-dividend stocks within the KOSPI 200. It is designed to provide high stock dividends as well as option premiums through the call option selling strategy. Hyul Heo, a researcher at NH Investment & Securities, noted, "Covered call products perform best when the market is sideways with high volatility," adding, "The higher the volatility, the higher the option premiums, increasing profits from option selling."

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