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Which companies in the Philippines have reported highest dividends in 2019? This is the question I’d like to answer in this article.
What is a dividend?
We know that companies earn profit from the business. And they have a choice to put it back to the business for expansion, improving operations, hiring the best talent, etc.
They also have a choice to give part of their profit to their shareholders in the form of dividend. When they do so, it is usually announced via the Philippine Stock Exchange website under Dividends and Rights.
Among investment funds, the First Metro Philippine Equity Exchange Traded Fund (FMETF) also gives out dividends.
How are dividends paid?
There are two ways that you can get paid.
In stock dividends, you don’t receive cash. Instead you will be given more shares in proportion to your investment. The bigger capital you’ve put into the company, the more shares that you get as your dividend.
The downside is that the company would issue more shares, and the effect is that the value of each issued share is diluted or lessened.
So instead, most companies prefer to give out dividends in the form of cash. It is then credited to your account with your stock broker.
There are also three dates that you need to remember.
- Ex-dividend date
- Record date
- Payment date
Ex-dividend date is the date set by the stock exchange when the list of stockholders eligible to receive the dividend is finalized. If you want to purchase the stock to get the dividend, then the sale must be done before the ex-dividend date.
Record date is the date set by the company when the names of stockholders who will receive the dividends must be on the books. The ex-dividend is usually a few days before the record date.
Payment date is the date when the dividend is issued.
When comparing companies, it is best not to compare them with the amount of dividend that they issue. Why? Because the face value of the amount may not reflect your true return.
Instead, a better way is to compare the dividend yield. The dividend yield is the result of the stock price divided by the dividend amount.
To better understand this, think of Company X whose stock is priced at ₱10 and Company Y priced at ₱20. Suppose that Company X declares of P1.50 and Company Y declares ₱2.00 dividends respectively.
Which do you think gives you more money? You would think that it’s Company Y because it’s higher in value.
The math tells a different story.
From the table, you can see that you have a better deal with Company X. Your dividend represents 15% of the price you paid for one share. In Company Y, you only receive 10%.
You can also think of it differently. For every peso that you invested, you get 15 cents in dividend under Company X and only 10 cents under Company Y.
Philippine companies with highest dividends in 2019
The data below is grabbed from Investing.com in September 2019 and accuracy is not guaranteed. Some of the items below are preferred shares as reflected in their names.
The companies are arranged from highest to lowest dividend yield.
|Name||Dividend||Dividend Yield (%)|
|F&J Prince B||0.4||11.17%|
|Pilipinas Shell Petroleum||3||9.10%|
|Pepsi Cola Products||0.04||6.03%|
|STI Education Systems||–||5.63%|
|City and Land Developers||0.04||5.23%|
|Philippine Savings Bank||2.25||5.14%|
|Leisure and Resorts World||–||4.78%|
|Leisure and Resorts B||–||4.78%|
|Del Monte Pacific Ltd||0||4.58%|
|Sun Life Financial||77.37||3.64%|
|Asia United Bank||1.6||3.19%|
|Petron Pref A||17.25||2.94%|
|Petron Pref B||17.25||2.94%|
|Petron Pref B||17.25||2.94%|
|First Gen Pref||0.88||2.93%|
|Philippine Stock Exchange||4.45||2.91%|
|Metro Retail Stores Group||0.06||2.45%|
|Metro Pacific Inv||0.11||2.21%|
|House of Investments||0.13||2.17%|
|Century Properties Group||0.01||2.12%|
|Bank of the Philippine Islands||1.8||1.99%|
|8990 Holdings Pref||1.81||1.98%|
|Far Eastern University||16||1.96%|
|San Miguel Pure Foods||1.6||1.76%|
|Shakey’s Pizza Asia||0.1||1.69%|
|Rizal Commercial Banking||0.45||1.66%|
|Manila Jockey Club||–||0.97%|
|Philippine Racing Club||0.08||0.92%|
|Liberty Flour Mills||0.5||0.86%|
|San Miguel Pref B||1.4||0.79%|
|San Miguel Pref E||1.4||0.79%|
|San Miguel Pref C||1.4||0.79%|
|San Miguel Pref D||1.4||0.79%|
|Century Pacific Food||0.1||0.70%|
|Puregold Price Club||0.2||0.48%|
|GT Capital Pref B||2.78||0.32%|
|GT Capital Pref A||2.78||0.32%|
|Travellers Int Hotel||–||0.18%|
Should you buy company stocks with dividends?
Again as with all things related to investment, buying dividend-paying stocks is a personal choice.
Advantages of dividend
Of course, when you receive a dividend the benefit is immediately clear.
You get something in return for your capital. Your investment increases not only through the appreciation of the stock price, but also with the dividend that you receive.
Purchasing stocks with high dividends can also be a way to diversify your portfolio.
Most of the companies that give out dividends are usually utility companies like power, water, or telecommunication. They may be stable and mature companies with arguably less room to expand and in regulated industries, but they do have lots of recurring income that they can afford to give away.
Disadvantages of dividend
Here are some of its disadvantages.
- less business capital
Tax. Upon receiving dividends, you would be taxed at 10%.
Non-guaranteed. They also vary depending on the income of the company. The schedule of distribution—that is, the date when it is going to be issued—is also not guaranteed. So they may not be as reliable as interest earned in savings account, time deposit, bonds or long term negotiable certficate of deposit (LTNCD).
Non-compounding. Cash dividend is money that is deposited to your account, and it’s not going to earn any interest or help in getting compounding return from your investment.
So it’s up to you to invest it back, which when you do would then incur charges that further diminishes your capital.
Less business capital. Dividends take away money that could’ve been used for the business.
Some investors would prefer to not receive dividend at all. They might want the company to use all the profits earned in a way that would improve the business like investing in research and development, purchasing state-of-the-art technology, expanding in new markets, etc.
All of these would translate to more value for shareholders, which in the long run is reflected on the price of the stock.
Hype. Another factor to look into is that a struggling company might announce a huge dividend pay-out to attract investors and inflate its stock price. After the hype, you may be left with a company stock that has little fundamental worth.
Liquidity. Some stocks might have liquidity issue. It might be difficult to buy or sell them should you choose to.