This year, the revenue of domestic high-dividend exchange-traded funds (ETFs) has outperformed the representative U.S. high-dividend ETF, "SCHD." KB Securities noted on the 21st that the upward trend of domestic high-dividend ETFs is expected to continue in the upcoming third quarter (August-October).
Park Yu-an, a researcher at KB Securities, attributed the strong performance of domestic high-dividend ETFs to the fact that major weighted sectors, including finance, are less affected by tariff uncertainties compared to other sectors, and that dividend growth rates have increased following corporate value-up programs.
Park noted that the stock prices of domestic high-dividend ETFs could rise further. First, the average operating profit growth rate of KOSPI market stocks is slowing. In the fourth quarter of last year, operating profits increased by 50% compared to the previous year, but in the first quarter of this year, it was limited to about 9%. Even during the transition from the second to the third quarter in 2021, when growth momentum slowed, the KOSPI High Dividend 50 Index showed a higher increase than the KOSPI index.
Park said, "As market profit growth begins to slow, the appeal of high-dividend stocks with validated cash flow increases in terms of stability and revenue."
There is also the momentum of the presidential election, Park explained, as financial stocks have historically shown weakness prior to elections and strength thereafter.
Park stated, "(After the election) with political uncertainties alleviated and the new government's recovery policy established, this expectation has been reflected in the stock prices of the financial sector," and added, "At this point, it is not possible to determine the medium-term tariff for the financial sector after the election, but it is necessary to reflect on the four past cases empirically."
Park suggested PLUS high-dividend stocks and TIGER Korea Dividend Dow Jones as interest for domestic high-dividend ETFs. PLUS high-dividend stocks are the largest by net worth among domestic high-dividend ETFs, with a financial sector ratio of 56.9% among its constituents.
TIGER Korea Dividend Dow Jones was newly listed the day before. It constructed its portfolio based on the methodology of one of the leading dividend indices in the U.S., the "Dow Jones U.S. Dividend 100 Index," using return on equity, annual dividend yield, and five-year dividend growth rate for domestic stocks. TIGER Korea Dividend Dow Jones also has a financial sector ratio of over 52.2% among its constituents.
Both ETFs are monthly dividend products. However, PLUS high-dividend stocks distribute dividends at the end of each month, while TIGER Korea Dividend Dow Jones provides dividends around the middle of each month (scheduled for the 15th).