[News Terms] The Right to Receive Dividends Has Disappeared, 'Baedangrak'

With the so-called 'double dividend' (receiving dividends twice within a short period) effectively coming to an end after last year's settlement dividend and the first quarter dividend, attention is focused on the stock price movements of stocks with concentrated ex-dividend dates on the 28th.

Typically, companies distribute a portion of their profits to investors as dividends after the fiscal year-end. To receive dividends from a company, an investor must be a shareholder as of a specific date. If shares are purchased after that date, the right to receive dividends for that fiscal period is lost. This specific date is the dividend record date set by the company. Until now, the dividend record dates for companies with December fiscal year-ends were concentrated at the end of December, but starting this year, the government changed the dividend system to allow '(prior) dividend payment, (later) record date designation,' which has led to a dispersion of ex-dividend dates.

[Image source=Yonhap News]

Companies that declare dividends recognize shareholder status only for those holding shares as of the dividend record date and pay dividends accordingly. In Korea, it takes two trading days from purchasing a stock to the actual deposit in the account, so to receive dividends, shares must be purchased at least two business days before the dividend record date. In other words, since shareholders entitled to dividends are confirmed two business days before the dividend record date ends, the day before the dividend record date is the ex-dividend date. For example, if an investor buys shares of KB Financial Group (105560) on the 28th, which is the day before the dividend record date of the 29th, it means the shares are bought on the ex-dividend date and the investor will not receive the settlement dividend. However, if the shares are held until the end of next month, which is the first quarter dividend record date, the investor can receive the quarterly dividend.

Usually, on ex-dividend dates, large sell orders emerge, causing a temporary sharp drop in stock prices. However, for double dividend stocks like KB Financial Group, which can receive both the settlement dividend and the first quarter dividend within a short period, the shareholder register closure date for the first quarter dividend payment is maintained at the end of March according to the articles of incorporation, so the impact of the ex-dividend date is expected to be minimal. For example, Shinhan Financial Group, which experienced its ex-dividend date on the 22nd, closed down only 1.05%, which was considered a relatively strong performance.