SOL Dividend Payout Ratio Top Picks Active Listed... Industry's First to Reflect Amended 'Payout Ratio'

Shinhan Asset Management will list the "SOL Dividend Payout Ratio Top Picks Active ETF" on the Korea Exchange on January 13. This monthly dividend ETF proactively incorporates the market's growing interest in dividend payout ratios, which has become a focal point amid recent tax law revisions.

The SOL Dividend Payout Ratio Top Picks Active ETF is the first ETF in Korea to use the dividend payout ratio-a measure of how much of a company's earnings are distributed to shareholders-as its core investment criterion. By evaluating not only the size of dividends but also the company’s willingness and sustainability in paying dividends, this payout ratio-focused high-dividend strategy is expected to establish itself as a new investment standard.

According to the 2025 tax law amendment, companies whose cash dividends have not decreased from the previous year and have a payout ratio of 40% or higher are classified as "excellent dividend type." Companies with a payout ratio of 25% or higher and whose cash dividends have increased by more than 10% year-on-year are classified as "effort dividend type." The SOL Dividend Payout Ratio Top Picks Active ETF has designed its benchmark methodology so that only companies meeting these payout ratio requirements can be included in its portfolio.

Kim Junghyun, Head of ETF Business at Shinhan Asset Management, stated, "The separate taxation system for high-dividend company dividend income will be applied starting from dividends paid out this year. As companies are actively raising their payout ratios, a dividend strategy centered on payout ratios will emerge as a key investment trend in the Korean stock market."

He added, "The SOL Dividend Payout Ratio Top Picks Active ETF is designed to pursue both dividend income and capital gains through an active strategy that flexibly responds to confirmed dividend periods and changes throughout the year, especially as policy changes strengthen shareholder returns by companies."

He further noted, "However, investors should be aware that the revised law applies only to dividends from individual companies, and ETF distributions are currently excluded from separate dividend income taxation."

The SOL Dividend Payout Ratio Top Picks Active ETF is managed with an active strategy to more accurately and promptly select companies with "good payout ratios." The ETF will not only respond around the time of general meetings of shareholders when dividends are confirmed but will also monitor dividend policies throughout the year and swiftly include companies whose payout ratios improve.

Dividends from Korean companies are typically outlined through provisional results and guidance in January or February, and finalized in March after audits and general meetings of shareholders. Recently, an increasing number of companies have shifted their record dates for dividends from the traditional end of December to periods around their general meetings, marking an important change.

Kim explained, "Unlike in the past, record dates for dividends now vary by company, and the degree of benefit can differ as well. Therefore, an active management approach with enhanced flexibility is well-suited for a payout ratio-focused dividend strategy."

He continued, "The improvement in shareholder returns-long cited as the main reason for the Korea discount-could lead to a restoration of trust across the Korean stock market. As the domestic market is at the early stages of dividend policy improvement, we can expect a positive trend as the revaluation of related companies gains momentum."

The benchmark index components include 20 stocks such as Woori Financial Group, Kia, Samsung Fire & Marine Insurance, KT&G, Hyundai Elevator, Samsung Securities, BNK Financial Group, and NH Investment & Securities. As an active ETF, both the portfolio composition and weighting may change during management.

The first monthly dividend for the SOL Dividend Payout Ratio Top Picks Active ETF will be paid on March 3.