"I've never seen a dividend like this before," one investor wrote online.
When its share price fell, Nexon responded by raising its dividend more than tenfold. The move by South Korea's largest game company sent markets into a frenzy.
Nexon, listed on the Tokyo Stock Exchange, announced a special dividend of 415 yen per share, lifting its total dividend for this year to more than 10 times last year's payout.
Based on the share price of 2,520 yen ($16) at the time, the dividend yield reached 19 percent.
Nexon announced the special dividend of 415 yen on Friday, sending its share price surging.
The total value of the special dividend comes to about 324 billion yen, or about 3 trillion won. Combined with the regular dividend of 60 yen per share, the full-year payout stands at 475 yen — a roughly 956 percent increase from last year's 45 yen.
The extraordinary dividend triggered a flood of buy orders from investors.
Nexon's share price surged the maximum daily limit of 20 percent on the day of the announcement, closing at 3,022 yen. In after-hours trading, the stock climbed as high as 3,580 yen.
With buy orders far outpacing sellers, trading volume fell to about a quarter of its usual level — an unusual sight even by market standards. On Japanese stock forums, posts poured in asking "Is the 475-yen dividend real?" and "I want to buy but can't get any shares."
Nexon has consistently pursued shareholder-friendly policies, combining steady dividends with share buybacks and cancellations. In May, it approved a buyback of up to 30 billion yen and completed the repurchase in July.
Large-scale shareholder returns by Samsung Electronics and SK Hynix are also seen as a potential catalyst for a rerating of their share prices. If the returns meet market expectations, analysts say they could drive a sustained rally.
Samsung Electronics and SK Hynix are expected to announce specific shareholder return plans as early as this month. Securities analysts forecast Samsung Electronics could commit 200 trillion won ($141 billion) annually and SK Hynix 100 trillion won, potentially combining for up to 300 trillion won in annual shareholder returns.
With share prices having been cut in half from their peaks last month, the market is calling for aggressive action. There is already a precedent: SanDisk, a US-based NAND flash manufacturer, announced Thursday that it would direct 100 percent of its free cash flow to shareholder returns, sending its share price up 13.7 percent.
Kim Dong-won, head of research at KB Securities, said Samsung Electronics' new shareholder return policy is expected to be "at least 10 times larger than the existing level" of 9.8 trillion won per year, adding that the dividend yield based on the current share price "is expected to exceed 7 percent."
Meanwhile, the combined number of retail shareholders in Samsung Electronics and SK Hynix surpassed 11 million as of the first half of this year.
park@heraldcorp.com
