Hyundai Motor Company is on track to achieve its largest-ever shareholder returns this year, driven by record-breaking dividends and an aggressive stock buyback program. The move reflects Executive Chair Chung Euisun's commitment to enhancing shareholder value as the company continues its rapid global expansion and financial growth.
Backing promises with action
Hyundai announced a 1 trillion won ($706 million) share buyback last week, its biggest yet. The funds were sourced from its recent initial public offering in India, which raised approximately 3 trillion won. This move wasn’t just symbolic -- it marked the first step in fulfilling a long-term plan revealed during Hyundai’s CEO Investor Day in August. The company had pledged to repurchase and partially retire 4 trillion won worth of shares by 2027 to bolster shareholder value.
The rapid execution of this plan -- 25 percent completed within just three months -- has earned Hyundai praise from industry analysts. “With this special shareholder return, the total payout ratio to shareholders could temporarily reach forty percent,” said Song Sun-jae, a researcher at Hana Securities.
Record-breaking returns in 2024
Hyundai has already returned 2.58 trillion won to shareholders this year, which includes 1 trillion won spent on stock buybacks and 1.58 trillion won distributed as dividends. By year-end, total returns could exceed 3 trillion won -- setting a new record for the automaker.
If the company matches last year’s year-end dividend of 8,400 won per share, it would distribute an additional 2.15 trillion won, pushing the total to 4.7 trillion won. Even a more conservative payout of 4,000 won per share would result in returns of at least 3.6 trillion won.
The company is also introducing a new metric, Total Shareholder Return, or
TSR, starting in 2025. TSR combines dividends and buybacks to measure the percentage of net income returned to shareholders. Hyundai has set a TSR target of 35 percent annually, beginning next year.
Profits fuel policy
Hyundai Motor’s growing commitment to shareholder returns comes on the back of stellar financial performance. Since Chung took the top seat in late 2020, the company has seen both sales and profits climb to record levels. By 2022, Hyundai-Kia had become the world’s third-largest automaker, an achievement it maintained in 2023, surpassing established competitors such as Nissan and Honda. In the US, it achieved a 10 percent market share in the electric vehicle sector, second only to Tesla.
Financially, Hyundai Motor is on track to post sales of 170 trillion won this year, up from 117 trillion won in 2021. Operating profit is expected to exceed 15 trillion won -- more than double its 2021 figure. This financial growth has allowed the company to steadily increase dividends, from 4,000 won per share in 2020 to 11,400 won last year.
While Hyundai’s aggressive shareholder return strategy has been well-received, the company is careful to maintain a balance between rewarding investors and reinvesting for future growth. “Not all of the proceeds from the Indian IPO will be returned to shareholders,” said a Hyundai Motor official. “A significant portion will be reinvested locally.” The company has also emphasized that the final year-end dividend will depend on overall annual earnings and a decision by its board of directors.
