There's been much talk about the shareholder returns generated by Samsung Electronics. Investors aren't too happy with the rate at which returns are being generated for them. They want the company to boost dividends and undertake other measures to increase the share price.
Despite a significant downturn in the memory sector, which has long been the cash chow for Samsung Electronics, the company managed to outpace leading tech companies like Microsoft and Meta by generating higher returns for its shareholders.
Samsung outpaces major tech players in shareholder returns
An analysis of the financial reports of major companies such as Samsung Electronics, Microsoft, Meta, NVIDIA, Apple, and Alphabet has revealed that Samsung Electronics' shareholder return was at 77.6% over the past year. It's considerably higher when compared to Microsoft's 57.5% and Meta's 59.5%.
The shareholder return rate mentioned here represents the portion of the company's net income that was used for dividends paid for common shares and share buybacks. Samsung has made a steadfast commitment in recent years to increase its shareholder returns, boosting them from just 20.4% in 2022 to one of the highest levels they've ever been.
It has committed to returning billions of dollars in dividends to shareholders. Han Jong-hee, the vice chairman of Samsung Electronics, reiterated the company's commitment at a recent shareholders meeting, pledging to return billions more in dividends until 2026 and distribute 50% of the company's surplus cash flow as dividends. “We will continue prioritizing shareholder-oriented management in challenging business environments,” he said.
It's commendable that Samsung maintains such a commitment to delivering enhanced shareholder returns, even though its capital investment requires have significantly increased for the semiconductor division, which sees elevated competition aided by government subsidies in major markets, prompting Samsung to ramp up spending on improving its competitiveness for advanced chip manufacturing.
