Hanwha Asset Management Converts ARIRANG K-REITs ETF to Monthly Dividends... Annual Dividend Yield Expected at 7%

Hanwha Asset Management announced on the 1st that it has changed the distribution (dividend) frequency of the 'ARIRANG K-REITs fn ETF (Exchange-Traded Fund)' from quarterly to monthly.

Hanwha Asset Management explained that this change in the dividend payment frequency is a measure to meet investors' dividend income expectations and help maintain a stable cash flow. The change will take effect from January 2024. The January dividend is 40 KRW, with a monthly dividend yield of approximately 0.59% (based on the closing price on the 29th). The annualized yield is about 7%, which is higher than the market interest rate.

The REITs invested in by the 'ARIRANG K-REITs fn ETF' are products that directly own or operate real estate and distribute rental income and sales profits to investors as dividends. According to the Real Estate Investment Company Act, REITs must distribute at least 90% of their distributable profits (dividend-eligible earnings) to shareholders. By distributing more than 90%, they are exempt from corporate tax, which enables high dividend payouts.

Additionally, investors can enjoy the effect of indirect real estate investment with a small amount through REITs. They benefit from the appreciation of real estate asset values and stable dividend income.

The ‘ARIRANG K-REITs fn ETF’ is the first domestic product investing in listed REITs in Korea and was listed on the exchange in May 2022. The total dividend for 2023 was 620 KRW, with a dividend yield of 9.1%, the highest level among domestic REITs ETFs.

The main constituent stocks include ▲ESR Kendall Square REIT ▲SK REIT ▲JR Global REIT ▲Shinhan Alpha REIT ▲Koramco Life Infrastructure REIT ▲Lotte REIT ▲KB Star REIT ▲iREIT KOKREIT ▲Hanwha REIT ▲Samsung FN REIT, holding more than 10 REITs listed on the domestic stock market. The total expense ratio is 0.25%.

Generally, REIT yields and interest rates tend to be inversely related. When interest rates decrease, the burden of financing is reduced, profitability improves, and dividend capacity increases. This year, with ongoing expectations of a U.S. base rate cut, domestic listed REITs are also expected to be revalued.

Yoon Joon-gil, head of the ETF management team at Hanwha Asset Management, said, “With this change in the dividend payment frequency, investors can reinvest dividends or use them for other investment products based on stable and continuous monthly cash flow, thereby enhancing investment efficiency. In the current financial market environment with high volatility, allocating assets to REITs, which have relatively lower valuation concerns, helps improve the safety of financial assets.”

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