Shares of companies holding large stakes in Samsung Electronics (005930.KS), including Samsung Life Insurance (032830.KS) and Samsung C&T (028260.KS), are surging. Investment demand is flowing into firms expected to see higher dividend income after Samsung Electronics announced a shareholder return plan worth up to 110 trillion won ($77 billion).
As of 1:44 p.m. on the 26th, Samsung Life Insurance was trading at 312,500 won, up 9.65% from the previous session, according to the Korea Exchange. Samsung C&T changed hands at 388,000 won, up 5.72%, while Samsung Fire & Marine Insurance (000810.KS) traded at 685,000 won, up 5.71%. At the same time, the benchmark KOSPI rose 1.93% to 6,872.83, with the shares of major affiliates holding Samsung Electronics stakes climbing sharply. Samsung Life Insurance owns an 8.51% stake in Samsung Electronics, while Samsung C&T (5.11%) and Samsung Fire & Marine Insurance (1.49%) also hold sizable holdings.
Samsung Electronics held a board meeting on the 21st and approved a shareholder return plan worth 90 trillion to 110 trillion won, the largest ever by a South Korean company. The figure is more than five times its previous maximum annual shareholder return. As a result, investment demand is seen concentrating on companies whose dividend income will rise. If Samsung Electronics pays out 30 trillion won in cash dividends for the third quarter, Samsung C&T would secure 1.7 trillion won in income. Samsung Fire & Marine Insurance is estimated to receive 450 billion won in dividends based on its 1.49% stake.
These companies have been expanding their own shareholder returns and are likely to increase their own cash dividends as their dividend income grows. Samsung C&T runs a strategy of paying out up to 70% of the dividend income it receives from affiliates to its shareholders. Brokerages accordingly expect Samsung C&T's dividend per share (DPS) to reach 8,550 won this year, about triple the 2,800 won paid last year. Samsung Fire & Marine Insurance has decided to raise its dividend payout ratio to 50% by 2028. Its DPS this year is being discussed at around 28,800 won, up about 48% from 19,500 won last year.
"Samsung Electronics' largest-ever shareholder return policy appears to be affecting the share prices of affiliates as well," an official in the securities industry said. "Depending on each company's specific shareholder return policy and future earnings, there could be additional momentum for gains."
