There is room for significant dividend growth for EWY, HKOR and the ETFs’ member firms. Samsung’s 2013 payout ratio of 12% was one of the lowest among South Korean large-caps. “South Korea’s dividend payout ratio ― the percentage of total dividends divided by net income ― stands at 22.4 percent, far below the global average of 47.7 percent,” the Korea Herald reported, citing Korea Exchange data.
EWY has a trailing 12-month yield of just 1.56% while HKOR, which debuted earlier this year, has a 30-day SEC yield of just 0.81%.
Samsung could be a major driver of that dividend growth. The company has $60 billion in cash, according to the Journal. To put that number into context, it is more than double Intel’s (NasdaqGS: INTC) cash hoard and more than the combined currency reserves of Argentina and Ukraine combined.
Other EWY and HKOR holdings have ample room for dividend growth. For example, Hyundai Motor and KB Financial have over $16 billion in cash combined, but the average yield on those stocks is just over 1%. [South Korea ETFs for 2015 Gains]
Horizons Korea KOSPI 200 ETF