Samsung Electronics has announced a record shareholder return plan worth up to 110 trillion won, but its stock price fell by over 6% in early trading. Analysts suggest that the emphasis on cash dividends rather than stock buybacks and cancellations has dampened investor sentiment.
As of 9:55 a.m. on the Korea Exchange, Samsung's shares were trading at 264,500 won, down 17,000 won (6.04%) from the previous trading day.
On August 21, Samsung announced a shareholder return plan valued between 90 trillion and 110 trillion won, marking the largest in the history of South Korean companies. Of this amount, 30 trillion won is set to be distributed as cash dividends in the third quarter of this year.
However, the market has expressed disappointment over the focus on cash dividends. Stock buybacks followed by cancellations can reduce the number of shares in circulation, potentially increasing the value of existing shares for current shareholders. In contrast, cash dividends are subject to a 15.4% dividend income tax.
This approach contrasts with SK Hynix's recent announcement to buy back and cancel 40 trillion won worth of its own shares, which led to a 12% surge in its stock price following the announcement.
Analysts believe that Samsung's decision to prioritize cash dividends over large-scale stock buybacks may be influenced by the Financial Industry Structure Improvement Act's '10% rule.' This rule limits the shareholdings of financial affiliates like Samsung Life and Samsung Fire & Marine Insurance in Samsung Electronics. If Samsung were to conduct significant stock buybacks, the total number of issued shares would decrease, potentially increasing the ownership percentage of its financial affiliates.
Future evaluations of Samsung's shareholder return strategy may change based on additional methods announced. The company plans to hold a board meeting at the end of October to finalize details regarding the third-quarter dividend. The remaining shareholder return amount and specific methods are expected to be determined in January 2027.
* This article has been translated by AI.
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