Burned by Stock Slump, Retail Investors Turn to Brokerages as Expected Dividend Yields Top 8%

Major brokerage stocks post double-digit declines over the past month, boosting dividend appeal

Kiwoom Securities' estimated dividend yield for this year put at 8.9%

Korea Investment Holdings, Samsung Securities and NH Investment & Securities also seen in the 8% range

As South Korea's stock market extends its slide, investors are turning to shares that offer high dividend income. In the brokerage industry, analysts say recent share-price declines have made securities stocks worth a look by lifting estimated dividend yields for this year. Expected dividend yields for major brokerage names are estimated at more than 8%.

According to the Korea Exchange, Kiwoom Securities shares fell 23.92% in the month through Nov. 5. Korea Investment Holdings dropped 18.05%, while Samsung Securities lost 12.74% and NH Investment & Securities fell 11.13%.

The selloff has increased the appeal of dividends relative to current share prices. Financial data provider FnGuide counted four brokerages with estimated dividend yields above 8% this year as of the Nov. 5 close: Kiwoom Securities, Korea Investment Holdings, Samsung Securities and NH Investment & Securities. Estimated dividend yield is calculated by dividing forecast annual dividends per share by the stock price on the reference date.

Kiwoom Securities, which has the highest dividend appeal among the group, is forecast to offer a dividend yield of 8.94% based on estimated DPS of 17,885 won and its Nov. 5 closing price of 199,700 won. Korea Investment Holdings is projected to deliver an 8.46% dividend yield, based on forecast DPS of 12,440 won and its Nov. 5 closing price of 147,100 won.

Samsung Securities is forecast to post a dividend yield of 8.22% with estimated DPS of 6,478 won. NH Investment & Securities is projected to offer an 8.17% dividend yield, based on forecast DPS of 1,924 won.

Jang Young-im, an analyst at SK Securities, said the average dividend yield for the brokerage stocks she covers — Mirae Asset Securities, Korea Investment, Samsung Securities, NH Investment & Securities, Kiwoom Securities and Daishin Securities — is now above 7% after the recent drop in share prices. She maintained an overweight rating on the sector.

Jang named Samsung Securities and NH Investment & Securities as her top picks in the sector, citing relatively low earnings volatility and high dividend yields. She also flagged Kiwoom Securities as a stock to watch. Its shares have fallen sharply since a third-quarter earnings shock, which has lifted its dividend yield, and the company is highly likely to pursue tax-exempt dividends in 2027, she wrote.

Kim Sung-hoon, an analyst at Hyundai Motor Securities, said major brokerage stocks have continued to correct, pushing their price-to-book ratios down to 0.7 to 0.8 times. But with expected dividend yields around 8% this year, valuations and dividend appeal are coming into sharper focus. Institutional flows have in fact been recovering since October, particularly in Samsung Securities and NH Investment & Securities, which have high payout ratios, he added. Further inflows may follow ahead of year-end dividend confirmations.

Kim also named Samsung Securities as his top pick in the sector. He said the firm is securing additional growth drivers, including promissory-note issuance and integrated foreign-investor accounts, on top of a stable retail business centered on wealth management. He also expects a future corporate-value enhancement plan to improve visibility on an active shareholder return policy, including a mid- to long-term payout ratio of 50%.

Still, some caution that high projected dividend yields may not translate into actual investment returns. Dividends per share could come in below estimates if earnings weaken, and further share-price declines could outweigh the dividend income.

Lee Su, Hankyung.com reporter 2su@hankyung.com