As the new administration emphasizes expanding listed companies' dividends and returning profits to shareholders, dividend stocks are drawing attention, and, as a result, high-dividend exchange-traded funds (ETFs) are being launched one after another. Asset managers are churning out related products in droves to keep up with the fast-changing trend.
The problem is that there is little differentiation among ETF products. Because of this, a simple shift of funds from existing products to new ones is being detected. It looks like the debate over the "late stage for dividend stocks" is being stoked.
According to the Korea Exchange on the 20th, on 16th Hanwha Asset Management's "PLUS Share Buyback High Dividend Stocks" was newly listed. It invests in the top 30 corporations on the KOSPI in terms of "total shareholder return," calculated by adding dividend yield and the share buyback ratio over the past year. It is the second high-dividend product launched this month after Kiwoom Asset Management's "KIWOOM Korea High Dividend & U.S. AI Tech." On the 23rd, Shinhan Asset Management's "SOL Korea High Dividend" is scheduled to be launched.
The recent spate of high-dividend ETF launches aims not only at dividend rates but also at broadly capturing corporations that proactively pursue shareholder-return policies such as share buybacks. In fact, Meritz Financial Group's stock price surged on the back of large-scale share buybacks, but it could not be included in existing high-dividend ETFs that build their baskets around dividend rates.
Among domestic high-dividend ETFs, "PLUS High Dividend Stocks," which has the largest net worth, selects and invests in the top 30 stocks with the highest expected dividend yields. By contrast, the follow-up "PLUS Share Buyback High Dividend Stocks" strategy is to include in the portfolio corporations that actively enhance shareholder value by reflecting factors such as share buybacks in addition to dividend yields.
While dividend-stock ETF strategies are evolving, funds have continued to flow out of existing domestic high-dividend ETFs. During the past week (Sept. 15–19), sustained outflows led most dividend ETFs, which had maintained an upward trend, to turn lower.
During the period, 64.4 billion won flowed out on a net basis from the "RISE Korea Financial High Dividend" ETF. The "TIGER Bank High Dividend Plus TOP10" and "KODEX Financial High Dividend TOP10" ETFs also saw outflows of 13.2 billion won and 7.6 billion won, respectively. The "RISE High Dividend" ETF also saw an outflow of 5.3 billion won.
Industry insiders say the domestic high-dividend ETF market has already entered a saturated phase. They point out that most portfolios are centered on financial stocks, lacking differentiation.
There are also warnings about the "dividend-stock trap." When the stock market is on an upswing, a strategy that follows the overall market's upward trend may be more effective than domestic dividend stocks, whose growth potential is limited.
An asset management company official said, "Domestic dividend stocks have the advantage of providing stable returns, but in an economic upswing, their performance may be limited compared with the strength of growth stocks or large blue chips," and added, "Rather than focusing solely on dividend yield, it is necessary to consider overall market trends and investment strategy in a comprehensive manner."