Pension fund to pocket nearly W1tr in dividends

South Korea’s national pension fund is expected to receive at least 930 billion won ($847 million) in dividends this year from companies that it invests in, some of which are planning to jack up dividend payouts for the year, data showed on Monday.

According to financial information provider FnGuide, the National Pension Service will pocket dividends from 274 companies in which it holds a stake of more than 5 percent.

Samsung Electronics Co., the country’s top market cap, is expected to deliver up to 247 billion won to the NPS. The company announced last week it plans to raise its dividend payout by up to 50 percent this year. The NPS holds a 7.81 percent stake in Samsung Electronics.

The data also showed that the NPS is likely to receive some 53 billion won in cash dividends from POSCO, the country’s top steelmaker.

SK Telecom Co. is expected to come next with 44.8 billion won, followed by Korea Electric Power Corp. with 38 billion won, Hyundai Motor Co. with 36.3 billion won, and Shinhan Financial Group with 32.1 billion won, the data showed.

South Korean companies have been miserly in giving out dividends, making their stocks undervalued. According to the Korea Exchange, the country’s bourse operator, the country’s dividend payout ratio ― the percentage of earnings a company gives to shareholders in the form of dividends ― stands at 22.4 percent.

The average in other countries is 47.7 percent.

The firms have come under mounting pressure to give back more to investors. Starting next year, the government will tax corporate cash reserves that are in excess of a certain amount as part of a broader effort to spur fresh investments and revive weak domestic demand. The goal is to make companies spend more so that money will trickle down to households to give them extra cash for consumption.

Under the revised tax code, an estimated 4,000 companies will have to pay a surcharge on their corporate taxes unless they spend a certain portion of their earnings on wages, dividends and investment. (Yonhap)