‘KRX Bank Index’ 1-month yield -0.8
Despite the dividend season, the rise in banknote stock prices slowed noticeably
Financial authorities recommend reducing’year-end dividend payout ratio’
Ahead of the dividend season, bank stocks, a representative high dividend stock, are seldom struggling and are continuing sideways in the box. This happened as the authorities made recommendations to major financial holding companies to reduce their dividend ratio.
According to the Korea Exchange (KRX) on the 25th, the one-month yield of the’KRX Bank Index’, consisting of eight financial holdings and banking stocks, recorded -0.80% as of the 24th. During the same period, the KOSPI and KOSDAQ index increase rates peaked at 7.85% and 6.34%, respectively.
Compared to the same period last year, the slump in banking stock prices is more pronounced. As of December 24, last year, the monthly return of the’KRX Bank Index’ was 4.84%, more than five times higher than this year.
Dividend stocks often start rallying at the end of the year and continue until the beginning of the year. In fact, at the end of the year, there is a strong tendency for dividend expectations to focus on’high dividend stocks’.
Bank stocks are representative high dividend stocks, and at the end of the year, they used to lead the share price rise. Last year, the dividend yield of stocks including the’KRX Bank Index’ was an average of 4-6%, maintaining the highest level among listed companies.
By company, Woori Financial Holdings 6.04%, Hana Financial Holdings 5.69%, and DGB Financial Holdings 5.76% took the lead. Back followed. Until last year, the’year-end dividend payout ratio’ of banknotes reached 25-27%. The year-end dividend payout ratio refers to the ratio of dividends to net profit.
But this year, things are very different. The financial authorities are known to have recommended lowering the year-end dividend payout ratio to 20% for major financial holding companies. Financial authorities have a position to prepare for losses by reducing dividends as the risk of delinquency in the banking sector has risen due to the spread of the corona. The recommendations of the authorities had an impact on the stock price trend. As the attractiveness of the bedang of the banking sector has declined, the buying trend is seldom gaining momentum.
However, it is unlikely that the government’s recommendation to reduce the’year-end dividend payout ratio’ will be reflected in the banking notes as it is. The reduction in dividend payout ratio is literally just a recommendation, and there is a lack of grounds for financial authorities to directly intervene in corporate dividends. There are also observations that even if the dividend payout ratio is adjusted, the width will be only 1-2% compared to the previous year.
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