Affiliates of conglomerates pay out low dividends

South Korean conglomerates’ average dividend payouts to investors hovered below the market average last year, data showed Monday, raising concerns over family-owned firms taking excessive profits.

The average dividend yield ratio came to 1.09 percent for 83 affiliates of the top 10 conglomerates listed on the main bourse, according to market researcher Corporate Governance Service.

The number lags behind the market average of 1.42 percent tallied by 710 listed firms on the main bourse, the CGS data showed. An additional 13 affiliates of local conglomerates reported zero dividend payouts, it added.

The dividend yield ratio refers to a company’s total annual dividend payments divided by its market capitalization, or a ratio of returns investors receive per share.

The South Korean stock market has been lucrative for investors as conglomerates compensated low dividend payouts with growth in share prices by using profits to expand corporate investments, market watchers said.

However, as the local stock market is expected to post slow growth down the road amid the prolonged economic slowdown, market watchers said that firms should expand dividend payouts for fair distribution of earnings.

“Companies with family ownerships are reluctant to give dividend payouts, as the corporate earnings are directly related with their assets,” said Lee Ki-ung, an assistant at Citizens’ Coalition for Economic Justice.

Lotte Group, South Korea’s largest retail conglomerate, posted the lowest dividend yield ratio of 0.31 percent in 2011, the CGS data showed.

SK Group, the country’s third-largest conglomerate, posted a dividend yield ratio of 1.86 percent last year, the highest number among local business groups. (Yonhap News)