KT&G to Boost Dividends Through Share Repurchases, Sustaining Profit-Linked Growth

KT&G Boosts Interim Dividend Amid Strong Performance, Signaling Commitment to Shareholder Returns

The company, a major player known for consistently maintaining or increasing dividends since its IPO, is reinforcing its reputation for robust shareholder-friendly policies.

SEOUL, South Korea – KT&G (KTCIY) is riding high on a wave of impressive financial results, reporting a first-half revenue exceeding KRW 3 trillion. The tobacco giant’s revenue and operating profit have now shown growth for three consecutive quarters, according to the company’s recent earnings release on August 7th.

The star of the show is KT&G’s global cigarette segment, which has achieved a remarkable “triple growth” – increases in revenue, operating profit, and sales volume – for the fifth consecutive quarter. Specifically, the segment saw revenue jump by 30.6%, sales volume increase by 9.1%, and adjusted operating profit surge by 51.1%, solidifying its position as a growth engine.

Adding to the positive news, KT&G has approved a 200 KRW increase in its interim dividend, bringing the total to 1,400 KRW per share. This decision reflects the company’s commitment to shareholder value, as highlighted during the Q2 earnings call. Management emphasized that dividend policy will be carefully calibrated considering a dynamic interplay of factors: share repurchases and cancelations, profit growth, and overall stock performance.

Since its 1999 listing, KT&G has built a strong track record of rewarding investors, maintaining or increasing its dividend payout for 26 consecutive years. The company’s dividend per share has consistently risen over the past three years, from 5,000 KRW in 2022 to 5,200 KRW in 2023, and 5,400 KRW in 2024.

KT&G’s renewed commitment to increasing the interim dividend reinforces the company’s forward-looking policy.

During the Q2 earnings call, KT&G CFO Sang-Hak Lee stated, “Based on robust first-half results, the board has approved a 200 KRW increase in the interim dividend to 1,400 KRW.” Lee further emphasized the company’s dedication to shareholder returns, noting that KT&G will “continue to explore opportunities for dividend growth through share repurchases and will proactively consider linking dividend payouts to stock-price appreciation.” The CFO also stressed that “KT&G will, to the greatest extent possible, incorporate dividend growth trends into its overall dividend policies, taking into account profit growth trends through Q3, Q4, and beyond.”

KT&G’s aggressive shareholder return strategy, spanning from 2024 to 2027, includes canceling 20% of issued shares (including newly repurchased shares). As the number of outstanding shares decreases, while the total annual dividend payout remains in the range of 580 to 590 billion KRW, the company is creating significant headroom for future per-share dividend increases.

Furthermore, KT&G announced a double-digit annual operating growth target. With rising stock prices potentially impacting dividend yield, analysts believe there is a strong possibility of increased annual dividend per share.

The financial sector is picking up on KT&G’s compelling dividend story.

Morgan Stanley analyst Kelly Kim, in a recent report titled “Robust 2Q25; Higher dividend upside,” projected further upside to his firm’s dividend per share (DPS) assumption of 5,800 KRW, noting that “as the management is taking dividend yield and rising earnings into consideration.” (EoD)