Investing in Dividend Stocks in September... Dividend Stock Funds Attracting Capital

2,698 Billion KRW Inflow into 274 Dividend Stock Funds in Last 3 Months
Average Return of 8.2% Since Start of Year... "Positive Trend for Dividend Stocks to Continue"

As the stock market continues to show sluggish performance, interest in dividend stocks is growing. Seasonally, September is considered an optimal time for dividend stock investments, leading to a surge of funds into dividend stock funds.

According to financial information provider FnGuide on the 15th, 269.8 billion KRW flowed into 274 dividend stock funds with assets under management exceeding 1 billion KRW over the past three months. Among 46 thematic funds classified by FnGuide, excluding ETFs such as overseas stocks and domestic bonds, dividend stock funds saw the largest increase in assets under management. During the same period, funds including value stock funds (91.9 billion KRW), public offering stock funds (77 billion KRW), income funds (42.9 billion KRW), Socially Responsible Investment (SRI) funds (578.5 billion KRW), and IT funds (92.4 billion KRW) experienced capital outflows.

Returns have also been favorable. The average year-to-date return of 274 dividend stock funds reached 8.2%. The Woori Small and Mid-Cap High Dividend Securities Investment Trust 1 (Stock) Class C recorded a 41.52% return since the beginning of the year. KB KBSTAR Large Cap High Dividend 10 Total Return Securities Listed Investment Trust (Stock) posted 28.53%, Samsung KODEX Dividend Value Securities Listed Investment Trust [Stock] 17.64%, NH-Amundi HANARO High Dividend Securities Listed Investment Trust [Stock] 11.77%,

Mirae Asset TIGER Dividend Growth Securities Listed Investment Trust (Stock) 11.33%, and ShinYoung Value High Dividend Securities Investment Trust (Stock) Class A 10.77%, among others, achieved double-digit returns.

The influx of funds into dividend stocks is largely due to the sluggish stock market. Since last month, as the market has been in a correction phase, investors are turning their attention to dividend stocks that can provide stable returns. The KOSPI has fallen 0.71% over the past month. In contrast, during the same period, the KOSPI High Dividend 50 Index rose 2.51%, and the KOSPI Dividend Growth 50 Index also increased by 1.6%. Han Sewon, a researcher at Shinhan Investment Corp., said, "Considering domestic and international market variables, the upper limit of the stock index is likely to be constrained. Moreover, as the hawkish tone (preference for monetary tightening) regarding continued tightening in the U.S. has softened, the intensity of this year's dividend stock season is expected to strengthen."

There is also analysis that avoidance demand is gathering due to the ongoing thematic stock market. Kang Daeseok, a researcher at Yuanta Securities, explained, "Investors are seeking relatively stable investment destinations free from volatility, including large-cap stocks, to avoid the thematic stock market centered on small and mid-cap stocks. Interest in dividends is growing as such an investment destination."

Seasonal factors also play a role. Traditionally, September is considered an optimal time for dividend stock investments. Kim Mingyu, a researcher at KB Securities, explained, "Dividend stocks show good seasonality in returns every April, September, and December (until the ex-dividend date). In April, dividends are confirmed at the shareholders' meeting and communication about shareholder returns takes place. In September, since the first half earnings are disclosed, the outline of possible dividend profits for the year is established, so mid- to long-term investors holding for at least several months may increase their interest in dividend stocks to enhance portfolio dividend yields. December is a period when short-term funds flock to receive dividends."

In the past, dividend stock investments performed well in September, but the probability of outperforming decreased toward the year-end. However, this year, a more favorable trend is expected to continue until the end of the year. Researcher Kang said, "Although expectations for corporate profits in the second half have somewhat lowered, the improvement trend remains valid, and the dividend per share (DPS) forecasts of major companies are improving. Also, although the stock index has risen since the beginning of the year, concentration in certain large-cap stocks has occurred, making other stocks less burdened by price. The dividend yields of other stocks have increased compared to last year, and the positive price trend of dividend stocks, which showed a gradual rise since August, is expected to continue."