In spite of a sharp surge in corporate earnings last year, South Korean companies are still reluctant to return their profits to shareholders.

According to sources from the financial and investment industry on Tuesday, Korean firms listed on the country’s main Kospi market paid out just 24.2 percent of their last year’s profit to shareholders. It is a slight increase from 2015 when their average dividend payout ratio reached 21.9 percent, as they raked in 18.5 percent more net profits last year than a year ago, according to data from the Korea Exchange. But they are still far behind other overseas companies in paying out dividends.

Listed firms in France paid out 65.7 percent of earnings in dividends on average last year, followed by American firms listed on the S&P 500 and German companies with 53.4 percent, respectively. Korean firms’ payout ratio also remained much lower than Asian peers with Japanese firms reaching 35.2 percent and Chinese companies 34.3 percent.

Korean companies’ dividend yield, the share of payout relative to the stock price, stood at 1.3 percent last year, also among the lowest in the world compared with the 2 percent to 3 percent range by American and European firms and 1.8 percent by Chinese firms.

While most Korean firms have remained stingy on paying dividends, investors have turned their eyes to generous payers on the local bourse cherry picking them. During the January to March period this year, foreign investors net bought 310.9 billion won worth shares of Posco whose dividend yield had reached 3.1 percent and dividend payout ratio to 46.9 percent last year. Their net buying of LG Chem Ltd. whose dividend yield last year was 1.9 percent with the payout ratio of 28.7 percent also amounted to 239.5 billion won over the same period. SK Innovation Co. with the dividend payout of 35.7 percent and dividend yield in the 4 percent range last year has drawn 211.8 billion won net buying from offshore investors so far this year.

By Moon Il-ho and Yoon Jin-ho

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]