A service that pays out overseas stock dividends on weekends and public holidays, when South Korea's stock market is closed, has established itself as a new convenience for investors just one year after its launch. Kakao Pay Securities opened the door as the first in the industry, paying out close to $10 million in dividends, and other brokerages have followed one after another, spreading the practice across the sector.
Kakao Pay Securities paid about $9.8 million in overseas stock dividends on non-trading days across a total of 61 occasions between Aug. 15 last year and Aug. 14 this year, on a pre-tax basis, according to the financial investment industry on the 13th. The payouts covered about 1.52 million transactions, with cumulative recipients totaling about 1.45 million. The recipient figure is the sum of customers counted on each payout date, so customers who received dividends on multiple days are counted more than once.
Kakao Pay Securities became the first in the industry to begin paying U.S. stock dividends on public holidays, and expanded the service to Saturdays starting in September last year. Previously, when a South Korean market holiday coincided with a U.S. dividend payment date, investors had to wait until the next business day for the money to arrive. The service allows them to use dividend income over weekends and extended holidays. Saturday payouts accounted for 44 of the occasions over the year, or about 72% of the total, and 48% of the amount paid. Dividends paid out in the United States on Fridays often arrive on Saturday in Korean time, which analysts said made the service particularly useful.
Public holiday payouts numbered only 17, but the average amount per occasion was about 2.8 times that of Saturdays. The gap reflects cases in which dividend schedules of U.S.-listed companies and exchange-traded funds coincided with extended holidays in South Korea. During last year's seven-day Chuseok holiday, six payouts accounted for about 23% of the annual total, or $2.25 million, and about 10% of the full-year amount was deposited on Oct. 6, the day of Chuseok itself. On New Year's Day this year, $1.67 million was paid out in a single day, the largest amount for any single payout date.
The holiday dividend service has spread to other brokerages. Toss Securities ran a pilot in August last year before a full rollout in October, then expanded to Saturday payouts in May this year. In August, it began paying principal and interest on overseas bonds on non-trading days as well, extending the service beyond stock dividends.
Larger brokerages joined with public holiday dividend payments in October last year. NH Investment & Securities covers all U.S. stocks, while Kiwoom Securities limits the service to large caps such as Nvidia and Nike and monthly dividend ETFs including the JPMorgan Equity Premium Income ETF (JEPI). Neither firm includes Saturday payouts, and operating details differ from company to company.
"As the investor base for stocks widens, competition over the finer points of brokerage services is becoming more important," an official at a brokerage said. "For investors who use dividends for living expenses or as funds for reinvestment, simply moving up the payment date can make managing their money easier."