Samsung Electronics Common vs Preferred Shares: 005930 vs 005935

The short answer

Before we begin: what are common and preferred shares?

Common and preferred shares are separate classes issued by the same company with different rights. The company's sales and earnings come from the same business, but shareholder rights and the market prices of the two classes do not have to be identical.

The exact differences between Samsung's two shares

Security identifiers and share counts come from Samsung's official listing page and Q1 2026 report. Repurchases, cancellations and other corporate actions can change the counts after the reporting date.

This is different from one share trading on KRX and NXT

The two concepts are often confused. When Samsung common 005930 trades on both KRX and Nextrade (NXT), the same security is trading at two execution venues. By contrast, 005930 and 005935 are two separate securities with different rights, even though the same company issued them.

Moving from 005930 to 005935 therefore requires selling one security and buying the other. It is not the same as buying 005930 on NXT and selling the same 005930 position on KRX. The venue question is covered separately in KRX vs Nextrade.

Why is the extra KRW 1 not the main dividend story?

Samsung's preferred term equals 1% of a KRW 100 par value: just KRW 1 per year. It is not KRW 1 extra every quarter. In 2025, the first three quarterly dividends were identical for both classes; the final dividend was KRW 566 for common and KRW 567 for preferred, creating the annual KRW 1 difference.

The 2020 total includes Samsung's special dividend. Historical dividends do not establish a future payout.

This is a historical-dividend-to-later-price illustration, not a forward yield forecast. At the August 4 preferred price, the extra KRW 1 adds only about 0.0006 percentage points of yield. Nearly all the illustrated yield gap comes from the preferred share's lower purchase price.

What really makes the preferred dividend yield higher?

Dividend yield has a numerator and a denominator. Samsung's preferred receives only KRW 1 more in annual cash dividend, while its quoted market price can be tens of thousands of won below the common share. The lower denominator, not the extra KRW 1, creates nearly all of the observed yield gap.

At a hypothetical identical KRW 240,000 price, the one-won preference would add roughly 0.0004 percentage points of yield. Even with an identical dividend, a KRW 176,400 purchase price would produce about a 0.95% yield. The economically useful description is therefore buying a similar cash-dividend stream at a lower equity price.

Why can the two market prices diverge?

The two classes share Samsung's earnings and capital-allocation policy, but they do not offer the same rights or trading conditions. The discount is better viewed as the combined outcome of several changing channels than as one fixed penalty.

These are plausible pricing channels, not proof that any single factor caused the discount on a particular date.

How do you calculate the preferred-share discount?

Compare both closing prices on the same date and use the common share as the base. Korean market commentary may call this a preferred discount or a common-preferred price gap.

AlphaScope recorded August 4, 2026 closes of KRW 240,000 for 005930 and KRW 176,400 for 005935. The resulting discount was 26.5%; equivalently, the preferred traded at 73.5% of the common price. Those two percentages describe the same relationship but are not interchangeable labels.

What does the post-split history show?

We paired 2,022 daily closes from the May 4, 2018 split listing through August 4, 2026. The discount moved through a wide range; it was not anchored to the extra dividend amount or to one stable “fair” level.

Daily returns had a 0.9146 correlation, consistent with both securities representing the same operating company. The residual difference can reflect voting value, investor clientele, index and flow effects, liquidity, expected dividends and changing risk appetite. The data establish co-movement, not a guaranteed arbitrage relationship.

Does a wide preferred discount automatically mean “cheap”?

The discount is a relative price against Samsung common, not an intrinsic valuation of Samsung Electronics. A preferred at a 30% discount can still be expensive if the common itself embeds unrealistic earnings or capital-allocation assumptions. A smaller discount does not prevent both classes from being absolutely undervalued.

1. Value Samsung before valuing the spread

   Test earnings, cash flow, semiconductor-cycle and capital-allocation assumptions for both securities.

2. Measure level and duration

   Compare the discount with its historical range and examine how long earlier extremes persisted.

3. Define a catalyst and a failure case

   Identify what could change relative demand and what you will do if the discount grows instead.

How should long-run performance be compared?

Price appreciation alone omits the feature that attracts many preferred investors: cash distributions. Total return combines price change and dividends. A reinvested-dividend total return, a cash-dividend holding return and an after-tax base-currency return are different measures, so comparisons must use the same convention.

In this partial comparison, the common's greater price appreciation outweighed the preferred's extra one won per year. That does not establish permanent common-share superiority; it demonstrates that higher dividend yield and higher total return are not synonyms. Different entry and exit dates can reverse the comparison.

How different are trading volume and ease of execution?

The preferred share also trades at large-cap scale, but its trading value is lower than the common share's. Over the final 20 calendar days through August 4, 2026, average daily trading value was approximately KRW 8.05 trillion for common and KRW 785.4 billion for preferred. In a fast market, differences in displayed depth, spreads and the impact of large orders can widen.

2026 YTD covers 143 trading days through August 4; unusually high turnover makes it non-comparable with a full calendar year.

• Small market order: both may normally execute without difficulty, but check the best quote and displayed size rather than only the last trade.
• Large order: aggregate size across price levels to estimate the average execution price. Preferred-share slippage may be larger even when headline turnover looks sufficient.
• Fast market: resting quotes can be cancelled, so past daily turnover may not represent immediately executable liquidity. Consider limits and split orders.
• Exit plan: estimate the market impact of selling the intended position, not only the ease of entering it.

Does a voting right matter to a small investor?

Common holders normally vote on director elections and other shareholder-meeting matters; preferred holders ordinarily do not. A minority investor may assign little private value to one vote, but the market can still price governance rights collectively, especially around control, restructuring or shareholder-return decisions.

Samsung's Q1 2026 ownership disclosure showed foreign investors at 47% of common shares and 73% of preferred shares. Domestic individuals represented 16% and 20%, respectively. These figures describe different holder bases; they do not prove why any group prefers one class or make either security safer.

How do buybacks and cancellations apply to the two classes?

A headline announcing a Samsung buyback is incomplete without the class, purpose and final treatment. Common and preferred are separate securities, so Samsung discloses quantities and expenditure by class. A purchase directly changes demand and available float for the class bought; its effect on the other class is indirect unless that class is also included.

On March 30, 2026, Samsung's board decided to cancel 73,359,314 common shares and 13,603,461 preferred shares repurchased under its 2025 resolutions; the cancellation took effect on April 2. Samsung disclosed that the cancellation reduced the share count without reducing stated capital because the shares had been acquired within distributable profits.

By contrast, common shares acquired for employee equity compensation may later be granted and should not be modeled as a permanent reduction on the purchase date. Read the disclosure chain as purpose → quantity by class → cancellation or disposal → completion result.

A practical decision framework

In practice, do not stop at “the preferred is cheaper by a certain percentage.” Consider the expected dividend, after-tax return, trading costs, holding period, intended exit size and a scenario in which the discount persists.

Common misconceptions

Before placing an order

• Security code: verify whether the order screen shows 005930 or 005935.
• Rights: read the latest periodic report for voting and preferential-dividend terms.
• Expected dividend: do not assume last year's dividend will continue unchanged.
• Simultaneous prices: calculate the discount from common and preferred quotes at the same time.
• Historical range: review the minimum, maximum and duration as well as the average discount.
• Liquidity: check trading value, best-quote size and the bid-ask spread.
• Company value: assess the semiconductor cycle, earnings, cash flow and capital allocation first.
• Tax and costs: reflect dividend tax, trading costs and the rules applicable to the account.