Samsung Electronics today confirmed plans to pay out record dividends to shareholders over the next three years. The equivalent of $11.8 billion will be returned to investors for the fiscal year 2020 which ended on December 31st. That's $1.73 per ordinary share. Pretty sweet, right? Wrong.
As idiosyncratic as that might sound, the range of shareholder reactions to this move will likely vary from indifference to angry disapproval. And the average response will almost certainly be a figurative shrug.
Or was, to be more specific, as illustrated by the fact that Samsung's stock isn't doing anything special in after-hours trading over in Seoul. Whereas its regular shares declined 2.22% throughout today, which comes down to around $1.70. The fact that this price drop is nearly identical to the announced dividend boost is not a coincidence. It's the market doing its thing.
Is Samsung really looking to spend money right now?
Any firm upping its dividend payouts to record heights isn't a particularly exciting property to hold for the average investor. It's certainly a secure one, but not many people ever became rich from playing it safe, which is why you won't see anyone celebrating what might appear to be free money from an outsider's perspective.
What's more, Samsung is sending some mixed signals today. Because just as it boosted its dividends to historic levels, it also claimed to be on the lookout for major mergers and acquisitions. This isn't a shocker, but its definition of “major” is disputable, at best. Because, with its de facto leader behind bars (again), Samsung's ability to make major moves is under a huge question mark. This is why the likelihood of any M&A activity akin to the Harman International Industries acquisition happening in the interim isn't at its highest right now, to put it mildly.
