Japanese trading firm Sumitomo said it will buy back its stock and adopt a progressive dividend policy, bringing it in line with the other four major peers in an effort to boost shareholder returns.

Sumitomo will allocate 700 billion yen (S$6.12 billion) of returns over the next three years, with a goal of total shareholder return ratio of 40 per cent, the company said on Thursday (May 2) in a filing. It’s also aiming for at least 12 per cent return on equity for the fiscal year ending March 2027, and plans to buy back up to 50 billion yen worth of shares.

The stock jumped as much as 7.6 per cent after the release.

The announcement follows a rally in shares of Sumitomo and its peers, which have benefited from Warren Buffett’s Berkshire Hathaway taking a stake in the companies. Activist investor Elliott Management is also said to have built a “large” stake, adding to pressure to boost shareholder returns. 

Buffett said in his February letter to investors that the companies follow shareholder-friendly policies that are “superior” to those practised in the US. BLOOMBERG