Key points
- Samsung's board signed off on as much as 110 trillion won ($79.3 billion USD) in shareholder returns for 2026, about five times the company's previous high.
- Samsung rose 3.87% on Friday as traders anticipated the plan, then gave the whole gain back after hours once the figures were out.
- The bigger gains landed elsewhere in the group. Samsung preferred shares closed up 8.26% and Samsung Life added 10.61%.
Samsung Electronics will return between 90 and 110 trillion won ($64.9 billion to $79.3 billion USD) to shareholders this year under a plan approved by its board on Friday. No Korean company has ever committed to a shareholder return this large. At the top of the range it would be about five times Samsung's previous record, the 20.3 trillion won ($14.6 billion USD) it paid out in 2020.
Samsung released the disclosure once Seoul's market had closed. Shares ended regular trading hours up 3.87% at 281,500 won ($203 USD). By 6:39 p.m. Korea time, they were changing hands after hours at 269,500 won ($194 USD), about 4.3% below the close.
The reason is the number Korean brokerages had been printing all week. Estimates of a 150 trillion won ($108.2 billion USD) return ran in the Korean press for two days before the board met, and retail investors read them. That figure was never Samsung's. It came from applying the company's own rule, that half of free cash flow goes back to shareholders, to a brokerage estimate of roughly 320 trillion won in free cash flow across 2024 through 2026. Half of that is about 160 trillion won, and the published guesses sat just under it.
The other thing working against Friday's announcement was SK Hynix. Its board voted earlier this week to buy back 40 trillion won ($28.8 billion USD) of stock and cancel every share of it, which is the cleanest form a payout can take, because cancelled shares are gone for good and everyone else's slice of the company gets bigger.
Samsung's plan leads with cash instead. About 30 trillion won ($21.6 billion USD) goes out as a dividend in the third quarter, with the exact size and method confirmed at the October board meeting, and the remaining 60 to 80 trillion won is not settled until the board meets again next January.
Samsung separately approved 15 trillion won ($10.8 billion USD) of share purchases to cover employee compensation, which is not part of the 110 trillion won and does not reach outside shareholders.
Where the buying went
The money went into the Samsung shares that are not Samsung Electronics common stock. Samsung's preferred stock closed at 207,000 won, up 8.26% on Friday, more than double the 3.87% gain in the common shares. Preferred shareholders in Korea have no vote, but they have first claim on the dividend, so a payout weighted toward cash is worth more to them than to everyone else. Korean preferred shares normally trade at a wide discount to the common stock, and Samsung's had stretched to 37% in May. By Friday's close it was 26.47%. That is not really a narrowing so much as a return to normal, since the discount has averaged 27.54% over the past year and May was the outlier.
The same logic lifted the Samsung companies that own large blocks of Samsung Electronics. Samsung Life Insurance rose 10.61% and Samsung C&T rose 5.75%, both far ahead of Samsung Electronics itself. Both are among Samsung Electronics' largest shareholders and both collect its dividend, so a 30 trillion won payout at the bottom of the group is money that travels up.
Yang Il-woo, an analyst at Samsung Securities (삼성증권), said the plan should still do its main job over time. "The Korean market has a generally weak relationship between ROE and P/B, and companies with high ROE tend to get discounted on valuation instead," Yang wrote. "Stronger shareholder returns in semiconductors and elsewhere should contribute to normalizing the valuation."
The Kospi closed at 6,912.95 on Friday, up 0.88%, back above 6,900 after opening 92.63 points lower. Samsung and SK Hynix supplied almost all of that. Nearly everything else went the other way. A total of 683 Kospi stocks closed lower, and the Kosdaq, Korea's smaller board, dropped 4.63% to 801.94. The won closed at 1,386.5 to the dollar, its strongest in eleven months, helped along by an expectation that Samsung and SK Hynix will have to sell dollars to pay for all of this.
Samsung's board meets again in January. That is when shareholders find out how much of the 110 trillion won comes back as cancelled stock rather than cash. Friday did not say.
Sources
- 뉴스핌, 삼성전자, 역대 최대 환원에도 주가 '주춤'…이유는 기대 선반영, on the board decision, the after-hours reaction and Yang Il-woo's comment
- 한국경제, 할인 끝나갑니다…삼성 100兆 역대급 환원에 자금 몰린 곳이, on the preferred shares and the discount to the common stock
- 한국경제, 삼성전자 150조 주주환원…한국 기업 역사상 최대 규모, on the 150 trillion won estimate that ran before the board met
- Our earlier coverage of the shareholder group that pushed Samsung for a buyback
- 머니투데이, 코스피 6900 회복…금리불안 밀어낸 삼전닉스, 환원 모멘텀 될까, on Friday's close and the moves in Samsung Life and Samsung C&T
Won-to-dollar conversions use Friday's exchange rate of 1,386.5 won per dollar. The Samsung Securities comments are translated from Korean. This is not investment advice.
