NH Investment & Securities Co. and Industrial Bank of Korea (IBK) are this year’s best dividend investments among Korean stocks.

According to 164 reports from 20 local securities companies released in the October-December period, the two stocks received the most recommendations for dividend appeal.

NH Investment & Securities is expected to deliver a dividend yield of 4.41 percent this year, higher than 3.96 percent last year, according to FnGuide data on Monday. IBK is expected to maintain a dividend yield of 3.85 percent. Dividend yield refers to how much a company pays out in dividends relative to its stock price.

"NH Investment and & Securities is also the most undervalued among large securities companies, which means it is less likely to see a further decline in its stock price,” said Seo Bo-ik, an analyst at Eugene Investment Co.

Banks were mentioned frequently as good dividend investment bets and IBK was the cream of the crop. Other recommended banking stocks included DGB Financial Group (3.30 percent), Shinhan Financial Group (2.90 percent) and Hana Financial Group (2.95 percent). Banking stocks continue a rally on expectations of benefits from the increasing interest rates in the United States and performance improvement in addition to year-end dividend payments.

Meritz Fire & Marine Insurance and Hyundai Marine & Fire Insurance were analysts’ favorite insurance stocks for dividend investment, earning four recommendations each. Dongbu Insurance and Samsung Fire & Marine Insurance too received multiple recommendations.

State-owned companies such as Korea Electric Power Corp. (KEPCO), Grand Korea Leisure Co. (GKL) and Korea District Heating Corp. (KDHC) were mentioned as blue chip stocks to watch for dividend investment this year. KEPCO’s expected dividend yield is 4.89 percent. Tobacco monopoly KT&G were recommended by four securities firms with an expected dividend yield of 3.37 percent. IBK and other state-owned public corporations usually reward shareholders with a high dividend yield as their majority shareholder is the government.

Analysts say the country’s three telecom stocks - SK Telecom, KT and LG Uplus - also deserve attention. SK Telecom’s expected dividend yield is 4.36 percent this year, slightly lower than last year’s. The corresponding figure for KT and LG Uplus is 2.37 percent and 2.51 percent, respectively, both higher than in the previous year.

By Chung Woo-sung

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