Investors Enticed by KT&G Share Buybacks

KT&G’s share buybacks have attracted the attention of investors interested in high-dividend stocks, reports The Korea Times.

Earlier this month, the company announced it will buy back 4.1 million of its own shares worth around KRW342.7 billion ($288.18 million) to enhance shareholder value. They will be acquired through an exchange-trade purchase through Feb. 4.

It also unveiled a mid- to long-term shareholder dividends policy—KT&G plans to pay out about KRW2.75 trillion by 2023, through existing cash reserves.

KT&G has paid high dividends to shareholders with an average payout ratio of 50.8 percent for the past 20 years, higher than the average Korea Composite Stock Price Index ratio of 40 percent and the Standard & Poor’s 500 Index ratio of 41 percent. It has paid dividends for 22-consecutive years since its listing in 1999.

KT&G’s third-quarter performance this year slightly exceeded the market consensus. Consolidated sales for the third quarter reached KRW1.57 trillion, up 7.2 percent compared to the same period last year, although operating profit decreased 2.3 percent to KRW423.9 billion.

The increase in sales was driven by the growth of KT&G’s heat-not-burn business and overseas cigarette subsidiaries. Operating profit, however, was impacted by a decrease in cigarette exports and delayed recovery among KT&G’s nontobacco subsidiaries.