This Stock Stands Out for Dividend Appeal Amid Market Volatility [Weekend Money]

Valuation Appeal Grows as Securities Stocks Remain Weak
Strong Performance Potential... Dividend Yield Nears 6%

Securities stocks, which surged sharply earlier this year, have struggled for the past three months. However, some analysts say that in the current situation where the stock market has plummeted, their valuation appeal is becoming more prominent and investors can expect attractive dividend yields.

On June 7, Daishin Securities maintained its 'Buy' investment rating and a target price of 45,000 won for NH Investment & Securities, citing these factors. The previous day's closing price was 31,750 won.

Securities stocks, which had surged at the beginning of the year, underperformed significantly compared to the KOSPI index returns over the past three months. NH Investment & Securities also declined by 19% from its closing price of 39,200 won on February 20. Typically, performance in the securities sector tends to be strongest in the first half of the year and weaker in the second half, and the stock price tends to factor in the full-year results early. This suggests that first-quarter results already reflected most of the annual performance.

This aspect has actually become a positive factor during the current market downturn. The prolonged correction has highlighted the company's valuation appeal. NH Investment & Securities' expected price-to-book ratio (PBR) for this year has fallen to about 1.09 times. If the expected dividend per share (DPS) of 1,850 won for this year is applied to the current share price, the dividend yield reaches 5.8%.

The recent capital increase also does not pose a significant burden. On June 2, NH Investment & Securities decided to carry out a third-party paid-in capital increase of 400 billion won targeting NH Nonghyup Financial Group. This is intended to strengthen its Integrated Investment Account (IMA) business capabilities and expand the credit limits for retail clients. As of the end of the first quarter, NH Investment & Securities' net capital ratio (NCR) stood at 159.3%, which was relatively low compared to competitors, and the retail credit limit was almost exhausted, making this a reasonable decision. With this capital increase, the company's total capital is expected to increase from about 9.97 trillion won at the end of the first quarter to about 10.28 trillion won.

Up to the end of last month, the average daily trading value in the second quarter stood at approximately 85.1 trillion won, a 21.4% increase compared to the first quarter average of 70 trillion won. Thanks to the semiconductor boom and the National Pension Service temporarily raising its stock allocation limit, the trading value on May 29 exceeded 141 trillion won. If this trend continues, NH Investment & Securities' brokerage commission income is expected to increase by 27.6% compared to the first quarter. Hyejin Park, a researcher at Daishin Securities, analyzed, "As interest rate volatility has recently increased, trading income is a key factor, but strong annual performance this year has enhanced the attractiveness of dividends, and the lower valuation is also favorable."

This content was produced with the assistance of AI translation services.