The year-end dividends season has returned, but the investment math has become more complicated than ever. The past practice in which all corporations paid dividends at the end of December has disappeared, scattering each corporation's ex-dividend date. On top of that, with "separate taxation of dividend income" taking effect for payments starting next year, a strategy centered on "after-tax yield" that weighs taxes as well as simple dividend yield is required.
With the government's improvement of the dividends system, more corporations are adopting a method of "confirming the dividend amount first, investing later." It is positive in that investors can check dividends in advance and then decide whether to invest, but they should note that ex-dividend dates now differ by corporation. In particular, for high-dividend stocks, stock prices often plunge on the ex-dividend date, making it important to set buy-sell timing that considers both dividend income and trading losses.
To receive dividends from listed companies that keep Dec. 31 as the record date under the traditional method, investors must buy shares by Dec. 26, two trading days earlier. Dec. 29 is the "ex-dividend date," when the right to receive dividends disappears, so investors who buy shares that day cannot receive settlement of account dividends.
The biggest feature of this year's year-end dividend investing is the introduction of "separate taxation of dividend income." For those subject to comprehensive taxation on financial income, it is a chance to reduce their tax burden, and for retail investors, it is expected to be a key variable that can raise the practical "after-tax yield."
The applicable corporations fall into two types. First are "dividend excellence" corporations whose dividends do not decrease compared with the 2024 fiscal year and whose payout ratio is 40% or higher. Second are "dividend effort" corporations whose payout ratio is 25% or higher and whose dividends increased 10% or more from the previous year.
IBK Securities suggested 10 companies among those with a Dec. 31 record date as being likely to benefit from separate taxation next year. In the high payout "dividend excellence" category are Samsung Life Insurance, Korea Zinc, KEPCO E&C, S-1, Cheil Worldwide, Hanil Cement, HiteJinro, and Hyosung TNC, while in the "dividend effort" category focused on increasing dividends are Kiwoom Securities and Samsung Securities.
It is also an investment point that listed companies are likely to roll out more aggressive shareholder-return policies to be included in the separate taxation category. Investors can check corporations' dividend payout ratios and recent dividend growth rate through disclosures. However, whether separate taxation ultimately applies will likely be determined after the shareholders meeting, when the payout ratio and other details are finalized.