Year-End Dividend Stock Investments: Stocks Expected to Qualify for Separate Taxation on Dividend Income

With the implementation of the separate taxation of dividend income, interest in related stocks is rising. NH Investment & Securities has identified Samsung Life Insurance, Cheil Worldwide, KEPCO KPS, KEPCO Engineering & Construction, Hite Jinro, and S-1 Corporation as stocks with a high likelihood of qualifying for separate taxation.

On December 15, NH Investment & Securities analyst Kim Jongyoung stated, "Although the dividend record date is at year-end, the actual size of the dividend is determined afterward. Therefore, investors seeking dividend income should consider a company's net profit, dividend payout ratio, and historical dividend policy at year-end when selecting target companies." He added, "The key requirement for separate taxation is the dividend payout ratio. However, the payout ratio is more heavily influenced by changes in net profit than by the dividend amount itself. Therefore, it is reasonable to assume that companies consistently maintaining a payout ratio above 40% and exhibiting low earnings volatility are more likely to qualify for separate taxation."

The separate taxation of dividend income will apply to dividends paid by December-closing corporations from January 1, 2026, onward. Therefore, if an investor makes a net purchase of a particular company's shares by December 26, 2025, and is listed on the shareholder register as of the end of December, and if the company meets the requirements for separate taxation, the investor will be eligible for separate taxation benefits on dividends paid in 2026.

Even companies with December 31, 2025, as their dividend record date will be subject to separate taxation, as the dividends will be paid in 2026. However, whether the company actually meets the requirements for separate taxation will only be confirmed after the general shareholders' meeting. The detailed schedule is as follows: setting the dividend record date, provisional disclosure of the dividend amount, finalization of the dividend at the general shareholders' meeting, announcement of whether the company qualifies for separate taxation, and payment of the dividend to shareholders recorded on the record date.

At present, stocks with a high likelihood of qualifying for separate taxation include Samsung Life Insurance, Cheil Worldwide, KEPCO KPS, KEPCO Engineering & Construction, Hite Jinro, and S-1 Corporation. Analyst Kim stated, "These companies have historically maintained stable dividend systems and relatively high payout ratios, which increases the likelihood that they will qualify for separate taxation."

There is also the possibility that some stocks will raise their payout ratios. If a company maintains a payout ratio of at least 25% and increases its cash dividend by 10% or more compared to the previous year, it will be classified as a company making efforts to increase dividends. Analyst Kim predicted, "To meet the payout ratio requirement, some companies may increase their dividends, or, if that is difficult, they may recognize excessive expenses in the fourth quarter in order to meet the requirements for separate taxation of dividend income."

NH Investment & Securities expects that large-scale funds targeting separate taxation will flow into the stock market in earnest between February and March next year. Analyst Kim explained, "This is because most companies finalize their year-end dividends and record dates during this period. These companies also often announce their dividends in advance as a matter of practice, making it easier for investors to determine early on whether separate taxation will apply. This is a factor supporting the outlook for large-scale capital inflows."