South Korean tech giant Samsung Electronics Co. said Friday it is considering raising its dividend payout for the year by up to 50 percent in order to boost shareholder value and join a drive to help pep up sagging domestic demand.
  
"As a special dividend, we are actively considering paying dividends that are 30 or 50 percent more than last year," the flagship unit of the country's top conglomerate said in a regulatory filing.
   
The exact amount of dividends will be decided at a board meeting slated for late January, and approved at a shareholders meeting in March.
   
Samsung paid a total of 2.16 trillion won (US$1.96 billion) in dividends last year, which could translate into the company paying between 2.81 trillion won and 3.24 trillion won for 2014. In 2012, the tech behemoth delivered 1.21 trillion won in dividends to shareholders.
   
Samsung soared 4.9 percent to close at 1,328,000 won on Friday, hitting a one-week high. The country's key stock index, the KOSPI, climbed 1.71 percent.
   
The planned increase in dividend payout came one month after the company said it will buy back 2.2 trillion won worth of its shares in order to stabilize its stock price. 
   
The world's No. 1 maker of smartphones has suffered a plunge in its share price due to lackluster profits from its mainstay mobile devices business, facing rising competition from Chinese players with low-end models.
   
Samsung reported 4.1 trillion won in operating income for the third quarter, down 60 percent from a year earlier, marking the lowest in three years and a fourth consecutive quarterly decline.
  

The third-quarter figure marked a sharp fall from a record high of 10.1 trillion won in the same quarter last year.
  
In particular, Samsung's operating profit in the mobile sector crashed to 1.75 trillion won in the third quarter from 6.7 trillion won a year ago.
   
The move on dividends also came as Samsung and other smaller rivals, armed with ample cash, were put under growing pressure to give back more to investors.
   
Starting next year, the government will tax corporate cash reserves that are in excess of a certain amount in a broader effort to spur fresh investments and revive weak domestic demand. The goal is to make companies spend more so that money will trickle down to households to give them extra cash for consumption.
   
Under the revised tax code, an estimated 4,000 companies will have to pay a surcharge on their corporate taxes unless they spend a certain portion of their earnings on wages, dividends and investment.
   
South Korean conglomerates are still sitting on large amounts of cash, wary of economic uncertainties and weak domestic demand, despite government pressure for them to spend more on wages, dividends and facilities.
   
Samsung Electronics held 168.6 trillion won in cash reserves at the end of September, up 6.5 percent from six months earlier, according to data compiled by financial information provider CEO Score.
   
Cash reserves of the country's second-largest conglomerate, Hyundai Automotive Group, surged 7.4 percent to 124 trillion won over the cited period, with those of energy and telecom conglomerate SK and home appliance conglomerate LG gaining 6.8 percent and 5.6 percent, respectively, to 58.8 trillion won and 48 trillion won, the data showed. 

Samsung's decision to raise dividend payout is expected to prod other smaller local rivals to follow suit.
   
Local companies have been stingy in paying dividends, a key reason why South Korean stocks are undervalued. The latest data from the Korea Exchange, the country's bourse operator, show South Korea's dividend payout ratio -- the percentage of earnings a company gives to shareholders in the form of dividends -- stands at 22.4 percent, far below the average of 47.7 percent in other countries. (Yonhap)