Samsung to expand dividend payments to shareholders through 2020

Samsung Electronics Co. said Tuesday it plans to double dividend payments from 2018 to 2020, in line with steps to give more to shareholders in the wake of its record-breaking earning reports.

The South Korean tech giant said it plans to allocate 9.6 trillion won ($8.5 billion) as dividends next year and maintain the amount for 2019 and 2020 as well. The combined dividend figure for this year is estimated at 4.8 trillion won, up 20 percent from a year earlier.

The total dividends for the 2018-2020 period is estimated to be 29 trillion won, the company said. 

Samsung also said its merger and acquisition projects will not be reflected in the free-cash flow.

"This policy change will increase the amount of capital available that can be given to shareholders and result in greater transparency and predictability. The portion of FCF allocated for shareholder returns will be set at a minimum of 50 percent over the three year period," the company said.

"After dividend payouts, any remaining portion of the 50 percent of FCF available for shareholder returns will be used either for additional cash dividends or share buybacks, as deemed appropriate," it added.

Samsung Electronics also decided to start to buy back and retire 712,000 common shares and 178,000 preferred shares over the next three months, in line with its 9.3 trillion-won buyback program announced in January.

The company also decided to provide a dividend of 7,000 won per share, which is estimated at 960 billion won. 

"The payment (of 29 trillion won) is based on the conclusion that the amount is manageable considering the forecast performance and financial conditions for the next three years," Samsung said during its meeting with investors. 

The company added it will still hand out dividends even if its performance over the 2018-2020 period falls shy of expectations.

Samsung said considering its expanding facility investment, its free cash flow will not increase significantly down the road. (Yonhap)