Stable Monthly Dividends at an Annual Average of 6%
Net Buying on 105 out of 125 Trading Days
Samsung Asset Management announced on the 29th that the net purchase amount by individuals for the ‘Samsung KODEX US Dividend Premium Active ETF’ has exceeded 10 billion KRW.
Listed on September 27 last year, this ETF has consistently provided a stable cash flow by paying monthly cash dividends of over 50 KRW per share, averaging about 6% annually, for six months starting from November. The year-to-date return including the distributions of this ETF is 0.79%.
The KODEX US Dividend Premium Active ETF is a localized product tailored to the domestic investment environment based on the ‘DIVO ETF (CWP Enhanced Dividend Income ETF),’ a flagship mega-hit ETF from Amplify, a US asset management company in which Samsung Asset Management acquired a 20% stake last year. It invests by selecting high-quality dividend growth stocks from the US S&P 500 that have consistently increased dividends over a long period, diversifying across various sectors such as IT, finance, healthcare, consumer goods, industrials, and energy. The DIVO ETF has shown a steady high distribution yield (an average of 0.5% monthly) while also demonstrating long-term price appreciation.
The KODEX US Dividend Premium Active ETF applies covered calls selectively and flexibly to some individual stocks depending on market conditions. To provide relatively higher and stable monthly dividends alongside the stable capital gains of dividend growth stocks, it employs a strategy of selling call options (the right to buy stocks or indices at a specific price) on about 20% of the portfolio stocks, generating additional dividend resources beyond the dividends from the invested companies.
In particular, unlike mechanical covered call methods, this ETF executes a flexible covered call strategy on certain individual companies within the portfolio based on market conditions, which not only secures stable capital gains but also increases the scale of dividend resources, maintaining a high monthly dividend rate without losses to the invested assets. This differentiates it from other index-type covered call products and dividend products.
In fact, since its listing, the KODEX US Dividend Premium Active ETF has been paying monthly distributions at an annual dividend yield level of about 6%. For an investor who invested 100 million KRW, this translates to a pre-tax monthly payment of approximately 500,000 KRW. The monthly dividend for this month is also scheduled to be paid in early April at a pre-tax rate of 53 KRW per share.
As stable monthly high dividend payments and stock price trends have been confirmed, continuous buying interest from individual investors is flowing into this product. Since listing, individual investors have recorded net purchases on 105 out of 125 trading days, and notably, on 59 out of 62 trading days when the stock price declined, excluding 3 days, they net purchased 7.6 billion KRW, effectively using price drops as investment opportunities.
Jung Jae-wook, head of the ETF Operations Team 3 at Samsung Asset Management, said, “The portfolio is composed mainly of dividend growth stocks with excellent cash flow among S&P 500 companies, and by applying a flexible covered call strategy, it appears that individual investors continue to flow in as the ETF consistently pays relatively high monthly dividends. The KODEX US Dividend Premium Active ETF is a recommended product not only for investors preparing for market stagnation or downturns but also for long-term investors or pension investors seeking stable growth investments accompanied by cash flow.”
Monthly dividend-paying products, including the KODEX US Dividend Premium Active ETF, can benefit from tax deferral effects on dividend inflows when invested long-term through retirement pension accounts such as pension savings or IRP. Additionally, if withdrawal conditions are met after age 55, a pension income tax rate of 3.3~5.5%, which is significantly lower than the separate taxation rate of 15.4%, can be applied.
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