Hanwha Asset Management, ARIRANG High Dividend Stocks... "Expect Approximately 9% Distribution Yield if Held Until Year-End"

Hanwha Asset Management announced on the 23rd that if investors purchase the ‘ARIRANG High Dividend Stock’ Exchange-Traded Fund (ETF) by the 26th, they can receive approximately 5% of the stock price as dividends.

According to Hanwha Asset Management, the expected dividend for ‘ARIRANG High Dividend Stock’ in April is approximately 750 KRW per share, which is higher than last year’s 730 KRW. If an investor had purchased ‘ARIRANG High Dividend Stock’ at the closing price of 13,340 KRW on the 19th, they would receive dividends amounting to about 5.62% (750 KRW) of the purchase price. The dividends are scheduled to be paid in early May.

Additionally, starting in May, the ‘ARIRANG High Dividend Stock’ will change its dividend distribution cycle to a monthly payout. This change reflects investors’ needs to provide a stable monthly cash flow. If investors purchase the ETF by April 26 and hold it until the end of the year, they can expect a dividend yield of approximately 9%.

Since its listing in August 2012, ‘ARIRANG High Dividend Stock’ currently has total net assets of 270 billion KRW (based on the closing price on the 19th), making it the largest domestic high-dividend stock ETF. It recorded a dividend yield of 6.03% (730 KRW per share) in 2023, ranking first among domestic high-dividend stock ETFs. In 2022, it also distributed 5.11% (680 KRW per share), and over the past five years, it has paid an average dividend of 5.01% to investors.

If investors missed the ‘Cherry Blossom Dividend’ from companies paying dividends in March and April this year or find it difficult to invest in individual dividend stocks, they may consider investing in dividend ETFs that will soon pay dividends. Investing in individual dividend stocks requires understanding each company’s dividend amount and payment schedule, which can be challenging. Moreover, individual dividend stock investments carry risks such as dividend amounts falling short of expectations or significant price drops on ex-dividend dates when dividend rights expire. Dividend ETFs can help diversify these risks.

Considering that the average bank fixed deposit interest rate over the past five years has been in the 2% range, the ‘ARIRANG High Dividend Stock’ ETF, which pays dividends at around 5% annually, offers a stable and relatively high level of income returns. Furthermore, taking into account dividend reinvestment, the performance of ‘ARIRANG High Dividend Stock’ since its listing has reached approximately 94.70% (as of the 19th), allowing long-term investors to enjoy both income returns and capital gains.

Investing through ISA (Individual Savings Account), DC (Defined Contribution pension), or IRP (Individual Retirement Pension) accounts offers tax benefits such as exemption or deferral of dividend income tax (15.4%). The government is currently considering increasing the ISA tax-free limit from a maximum of 2 million KRW per year (4 million KRW for low-income earners) to 5 million KRW per year (10 million KRW for low-income earners). If investors hold their pension accounts for more than five years and withdraw after age 55, they benefit from a lower pension income tax rate (3.3% to 5.5%), resulting in tax savings.

‘ARIRANG High Dividend Stock’ selects high-dividend stocks ranked within the top 30 by expected dividend yield among the top 200 stocks by market capitalization. Unlike focusing on past dividend yields, it emphasizes future expected dividend yields and continuously adjusts its portfolio with stocks expected to pay high dividends annually.

The main investment sectors include Financials (63.97%), Communication Services (8.69%), Consumer Discretionary (7.67%), Energy (5.58%), and Industrials (4.36%). Key holdings include Hana Financial Group, Kia, KB Financial Group, Industrial Bank of Korea, Woori Financial Group, Korea Gas Corporation, and Samsung Card. The total expense ratio is 0.23%.

Geum Jeong-seop, Head of ETF Business Division at Hanwha Asset Management, said, "‘ARIRANG High Dividend Stock’ is a leading domestic dividend ETF with proven performance, having paid high dividends for over 10 years. Starting in May, we will change the dividend distribution cycle to monthly to meet the needs of many dividend investors and provide a stable monthly cash flow."