Securities Firms Expand Dividends as Bull Market Boosts Earnings

Securities firms are expanding dividends ahead of their annual shareholder meetings. Brokerages enjoying strong earnings amid the stock market boom are pursuing aggressive shareholder return policies. Small and mid-sized firms are also joining the dividend expansion trend.

According to the financial investment industry on the 17th, small and mid-sized securities firms are expanding dividends beyond previous years' levels.

LS Securities will pay a cash dividend of 500 won per common share, with total dividends amounting to 34.1 billion won. Its dividend payout ratio stands at 148% on a consolidated basis, with year-over-year dividend growth of 131.7%—the highest in the industry. The dividend payout ratio represents the proportion of net income distributed to shareholders as dividends.

Hanyang Securities, which welcomed KCGI as its new major shareholder, will pay 1,600 won per share. The firm will return 37% of its net income to shareholders as dividends. Dividends increased 67.9% from the previous year. The new management at Hanyang Securities is known to prioritize shareholder-friendly policies.

Daol Investment & Securities will pay 240 won per share, with a payout ratio of 41% and year-over-year dividend growth of 60%. DB Financial Investment also decided on a record-high cash dividend of 550 won per share. Yuhwa Securities, a traditionally high-dividend brokerage, set its dividend at 220 won per share, with a payout ratio of 96% and dividend growth of 37.1%.

Additionally, Hyundai Motor Securities will pay 370 won per share (40% payout ratio, 62.6% dividend growth), Eugene Investment & Securities will pay 180 won per share (26% payout ratio, 80% dividend growth), and Bookook Securities will pay 2,400 won per share (47% payout ratio, 59.2% dividend growth).

The active shareholder return policies by small and mid-sized firms—which have relatively smaller capital bases than major brokerages and differ in profit distribution from increased market trading—are linked to the government's Corporate Value-up Program. Tax benefits from the separate taxation of dividend income, implemented this year, also contributed to the trend.

Requirements for high-dividend companies eligible for separate taxation include: cash dividends not decreasing from the previous year while maintaining a payout ratio of 40% or higher, or a payout ratio of 25% or higher with dividends increasing at least 10% year-over-year. Most firms are expected to meet the government's high-dividend company criteria by expanding dividends beyond previous years' levels.