"High Likelihood of Interim and Quarterly Dividends for Industrial Bank of Korea, LG, and Others"

On May 30, Korea Investment & Securities released a report titled "Quarterly Dividends Are Coming," analyzing that the number of companies implementing interim and quarterly dividends is steadily increasing.

Among KOSPI-listed companies that paid dividends last year, 11% conducted interim dividends and 3% paid quarterly dividends, with the majority only paying year-end dividends. In contrast, 95% of S&P 500 companies pay quarterly dividends, and 91% of Nikkei 225 companies pay interim dividends. Interim and quarterly dividends are viewed positively as they enhance dividend predictability and encourage long-term holding.

The number of KOSPI-listed companies paying quarterly dividends increased significantly from 12 in 2022 to 20 last year. The number of companies paying interim dividends also rose from 55 to 65. In the first quarter of this year, 24 companies (including 3 on KOSDAQ) paid quarterly dividends.

The average payout ratio (the percentage of net profit paid out as dividends) for companies that adopted interim or quarterly dividends last year was 51%, which is much higher than the 37% for companies that only paid year-end dividends. Analyst Jung Dasom of Korea Investment & Securities stated, "Companies newly implementing interim or quarterly dividends show a strong commitment to expanding dividends and shareholder returns, and this suggests that they have secured sufficient resources for dividends."

There are 22 companies that have announced plans to introduce interim or quarterly dividends in their value-up disclosures, of which 9 have already implemented them as of last year. Korea Investment & Securities analyzed that, following recent approval by the Financial Services Commission, 13 companies?including Industrial Bank of Korea, LG, Lotte Chilsung, Kolmar Holdings, and POSCO International?are highly likely to introduce interim or quarterly dividends next year.

At the beginning of this year, an amendment to the Capital Markets Act allowed companies to set the record date for quarterly dividends after a board resolution. Korea Investment & Securities believes that 9 companies, including Industrial Bank of Korea and Hyundai Rotem, which have revised their articles of incorporation accordingly, are highly likely to implement quarterly dividends in the future.

Among companies that did not pay interim or quarterly dividends last year, 23 received approval for amendments to their articles of incorporation to improve dividend procedures. Analyst Jung explained, "While some companies may have simply reflected changes to the standard articles of incorporation, the fact that companies proactively established procedures for quarterly dividends suggests that we can expect an expansion of dividend cycles and more active shareholder returns."