Samsung woos disgruntled investors with big, fat dividend hike

December 19, 2014, 12:46 PM UTC
Samsung Holds Shareholders Meeting
A man using a mobile phone as he walks past a Samsung Electronics Co. advertisement displayed at the company's Seocho office building in Seoul, South Korea, on Friday, March 15, 2013. Samsung Electronics's President of visual display Yoon Boo Keun and President of mobile communications J.K. Shin were appointed as co-chief executive officers following the company's shareholder meeting today, joining Vice Chairman Kwon Oh Hyun, who will also retain his position as co-CEO. Photographer: SeongJoon Cho/Bloomberg via Getty Images
Photograph by SeongJoon Cho — Bloomberg/Getty Images

South Korea’s Samsung Electronics Co Ltd (SSNLF) said Friday it’s considering lifting its 2014 dividend payout by up to 50%, its latest attempt to boost its share price in a year plagued by disappointing earnings.

The world’s No. 1 smartphone maker said in a regulatory filing that it is actively considering a “special increase” in dividend of between 30 percent and 50 percent. Its board will decide the year-end dividend amount in January, and seek approval at its annual shareholder meeting, set for March.

The announcement comes amid mounting pressure for the tech giant to return more capital to investors as it heads for its worst annual profit in three years, crimped by a falling share of the global smartphone market.

Explaining its move, the company said it wants to increase shareholder value, as well as contribute to revitalizing the South Korean economy.

The firm’s stock has recovered from a multi-year low hit in October, thanks in part to the company’s November announcement of a $2 billion share buyback plan. But shares are still down 3.2% for the year.

“The company didn’t have much excuse not to increase dividends when it’s sitting on 60 trillion won ($55 billion) worth of cash … this will help share prices remain stable around current levels,” said HDC Asset Management fund manager Park Jung-hoon. He expects the year-end dividend payout to be close to 20,000 won per share.

Samsung Electronics said in January this year that it would significantly increase dividend payouts in 2014, though in July it kept the interim dividend unchanged from a year earlier. The firm’s total 2013 dividend payout was about 2.2 trillion won, including a year-end dividend of 13,800 won per common share.

Shares in the tech firm closed up 4.9% on Friday, outperforming a 1.7% rise for the broader market due to hopes for an earnings recovery and bigger dividends.