During September's KOSPI Decline... High Dividend Index Rises by 5%

KOSPI High Dividend 50 Index Rises 5.15% in September

On the 1st, the KOSPI index started lower due to the sluggish U.S. stock market. Dealers are working in the dealing room of Hana Bank in Euljiro, Seoul. The won-dollar exchange rate opened at 1,185.0 won, up 1.0 won from the previous session, showing a steady trend. Photo by Moon Honam munonam@

[Asia Economy Reporter Gong Byung-sun] Although the KOSPI declined throughout September, high-dividend stocks showed strong performance.

According to the Korea Exchange on the 4th, last month the ‘KOSPI High Dividend 50 Index’ rose by 5.15%. The KOSPI High Dividend 50 Index consists of the top 50 stocks listed on the Korea Stock Exchange with the highest dividend yields. Dividend yield refers to the ratio of dividends per share to the stock price.

The strong performance of the high-dividend index occurred despite the KOSPI’s sluggishness. During the same period, the KOSPI fell by 4.08%, marking the largest monthly decline since March last year (-11.69%).

Currently, the KOSPI High Dividend 50 Index includes bank stocks such as KB Financial Group, Shinhan Financial Group, and Hana Financial Group, as well as large-cap stocks like Samsung Electronics, Hyundai Motor, and POSCO. Companies with high average dividend yields based on dividend performance over the past three fiscal years are included in this index.

In addition, dividend-related indices such as the ‘KRX High Dividend 50 Index’ and the ‘KRX-IHS Markit KOSPI 200 Predicted High Dividend 50 Index’ recorded returns of 2.19% and 1.18%, respectively.

The reason high-dividend stocks performed well is that increased market volatility and uncertainty have drawn attention to them. Even when stock price gains are sluggish, high-dividend stocks guarantee investors a certain level of dividend income.

Looking at individual stocks, SK Gas had the largest increase over the month at 34.73%, followed by Korea Electric Power Industry (33.19%), Tongyang Life Insurance (29.44%), Halla Holdings (20.00%), and Yulchon Chemical (18.73%).

Foreign investors are also flocking to high-dividend stocks. Foreigners net purchased approximately 1.8434 trillion KRW worth of 30 stocks included in the high-dividend index. Excluding Samsung Electronics, net inflows amounted to about 800 billion KRW.

As the year-end dividend payout period approaches, it is expected that more funds aiming for dividend income will flow into the stock market. Shinhan Investment Corp. explained in its Q4 outlook report, “The KOSPI’s 12-month forward dividend yield exceeds 1.8%, maintaining relative attractiveness even considering market interest rates,” and added, “Korea’s relative dividend payout ratio compared to the U.S. remains stable at 67%.” Furthermore, it stated, “The inflow of funds targeting Q4 dividend income could be favorable for the index’s direction.”