Samsung’s $66 Billion-$81 Billion Shareholder Return Plan Could Lift Kospi Dividends by as Much as 60%, Analysis Finds

Samsung’s $66 Billion-$81 Billion Shareholder Return Could Ripple Across the Broader Market

Hyundai Motor Securities Sees Samsung Electronics Shareholder Returns at $66 Billion-$81 Billion

Kospi Dividends Could Rise by as Much as 60% if Cash Payouts Expand

Samsung Electronics Co.’s plan for what would be a record shareholder return could lift total dividends across the Kospi by as much as 60%, according to an analysis that points to a spillover effect through the conglomerate’s key affiliates. Bigger payouts from Samsung Electronics would raise dividend income at Samsung Life Insurance, Samsung Fire & Marine Insurance and Samsung C&T, potentially reshaping the dividend landscape across the benchmark index.

“The increase in Samsung Electronics dividends flows directly to Samsung Life, Samsung Fire and Samsung C&T, and then through Samsung C&T to KCC,” Kim Joong-won, an analyst at Hyundai Motor Securities, wrote in a shareholder return report dated Sept. 23. Dividend yields at related companies would also rise, with Samsung C&T and KCC standing to see a relatively larger spillover effect because of their strong linkage to dividend income.

Samsung Electronics said at a board meeting on Aug. 21 that it plans total shareholder returns this year of 90 trillion won to 110 trillion won, equivalent to about $66.3 billion to $81 billion. The plan follows its existing policy of returning 50% of cumulative free cash flow from 2024 to 2026. That would be about five times the 2020 payout and the largest in the company’s history.

The company plans to pay about 30 trillion won, or roughly $22.1 billion, in cash dividends in the third quarter and will finalize the detailed amount at the end of October. It will decide in January 2027 how to deploy the remaining 52.65 trillion won to 72.65 trillion won, or about $38.8 billion to $53.5 billion, and in what form.

The key question is how much of the remaining shareholder return pool will be allocated to cash dividends. Samsung Life and Samsung Fire hold 8.51% and 1.49%, respectively, of Samsung Electronics common shares, for a combined stake of about 10%. If Samsung Electronics retires a large amount of treasury common stock, the total share count would fall and the two financial affiliates’ ownership ratios could rise, potentially creating pressure to adjust their stakes. Hyundai Motor Securities said that makes a higher cash-dividend share of the remaining shareholder return funds more likely.

The listed companies with meaningful Samsung Electronics holdings are Samsung Life at 8.51%, Samsung Fire at 1.49% and Samsung C&T at 5.11%. KCC does not directly own Samsung Electronics shares, but it holds a 10.49% stake in Samsung C&T. That means dividends received by Samsung C&T can feed through to KCC.

Hyundai Motor Securities said Samsung Electronics’ dividend increase would ultimately translate into larger Kospi payouts. If Samsung Electronics’ total cash dividends reach 70 trillion won, 90 trillion won or 110 trillion won, equivalent to about $51.6 billion, $66.3 billion or $81 billion, that would add 19.6 trillion won to 59.6 trillion won, or about $14.4 billion to $43.9 billion, to the current combined dividend forecast of 50.4 trillion won, or about $37.1 billion, Kim wrote. Of that, Samsung Electronics common-share dividends would rise by 17.3 trillion won to 52.7 trillion won, or about $12.7 billion to $38.8 billion, while common-share redistributions from four related companies would increase by 1.5 trillion won to 5.7 trillion won, or about $1.1 billion to $4.2 billion.

That would lift total Kospi common-share dividends to 116.1 trillion won to 155.7 trillion won, or about $85.5 billion to $114.7 billion, from the current 97.3 trillion won, or about $71.7 billion. That amounts to an increase of 19.4% to 60% from existing forecasts.

According to Hyundai Motor Securities, the five companies including Samsung Electronics would account for 49.3% of all Kospi dividends in 2026. Financial affiliates face ownership-ratio regulations on Samsung Electronics holdings, limiting the scope for larger retirements of treasury common shares, Kim wrote. That means the share of remaining funds allocated to cash dividends will be the key variable in determining dividend growth at related companies and across the Kospi.

The dividend spillover effect will not appear all at once. After Samsung Electronics pays cash dividends, Samsung Life, Samsung Fire and Samsung C&T are set to redistribute the additional income in stages through this year’s year-end dividends and payouts after 2027. For KCC, which sits one step further down the chain through Samsung C&T, the effect could come later.

Kang Kyung-ju, Hankyung.com reporter memory@hankyung.com