A W41trn (US$400bn) package aimed at reinvigorating South Korea's economy has sharpened investor focus on dividends in a country whose corporate earnings payout ratio is the lowest in the world. A three-point plan detailed earlier this month by finance minister Choi Kyung Hwan will see withholding tax on dividend payments reduced. Retained earnings will also be taxed at up to 10% to encourage corporates to pass money into the economy by increasing distributions to shareholders and employees. For 2014, South Korean corporates will pay out just 14% of earnings, according to UBS estimates, while US firms are set to pay 33% and Europe 29%. The median dividend yield for South Korean firms comes in at just 1.2% -only half of that being paid by Chinese firms and just over a quarter being paid in Australia.
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