On this short article, let’s talk about basic understanding of dividends in the Philippine stock market. This will provide basic knowledge if you’re a beginner and hopefully will be able to answer your questions about dividends.
As we already know, there are two ways you can make money on the stock market. Let’s recall them again.
First is the price appreciation where you buy a stock/share at low price and then able to sell that stocks/s at higher price. Taxes and fees will be less(which is done via your stock broker), that will be your gain or earnings.
The second way you can make money on stock market is through stock dividends. As I shared on the stock market terms a beginner should know, stock dividends are paid out to shareholders, representing earnings of the company that is not going to be reinvested in their business.
In basic terms, stock dividends are “bonus” of the company to their shareholders especially if the company is doing well. You’ll be entitled by either cash or stock dividends.
2 Types of dividends in the Philippine stock market
1. Cash dividends
In a nutshell, cash dividends are cash earnings for every share of stock declared by the company. For example, the company ABC declared a P1.00 cash dividend per share and you owned 15,000 shares of that ABC company.
Given that you hold that shares of stocks 1 day before the “ex-date“, you’ll be entitled to that P1.00/share cash dividends.
So you’ll have additional P15,000 extra funds on your account on the “payment date”. Excluding taxes and related fees. I hope you get the idea.
2. Stock dividends
Stock dividends are additional shares given to shareholders at no cost. If the company declares a 25% stock dividend, a stockholder with 10,000 shares will be entitled to an additional 2,500 shares of stock. These shares can also be sold anytime after the shares have been issued.
In my own point of view, I prefer to have cash dividends over stock dividends. This is because in most cases, if the company issues stock dividends, the stock price will adjust to the number of shares on the market making it little bit low from the previous without significant change in value. If you experienced this, I know you got my point.
In cash dividends, you can have that cash straight to your account(on payment date) and you can use them to buy other shares and re-investing them. Atleast for me. 🙂
So you asked, how am I going to avail or acquired those dividends? Either cash or stock. Here’s how.
- Your stock broker will inform you about it (via email or call or other notification)
- You can see them on your account (online)
- You can see them on PSE website
If you are eligible to receive the dividends, it will be credited to your account on the payment date. Most of the time, a month after the ex-date. Once it’s credited, you can see additional cash on your funds or additional shares of stock on your portfolio.
Additional information about dividends
The cut off point for dividend entitlement is a day before ex-date (you must be a shareholder of that particular stocks, one day before the ex-date).
2. Payment date
The day when the dividend is given to shareholder (usually a month after the Ex-date).
Before I end this article, let me share you the some of the stocks that pay high dividends in the Philippine stock market. Here they are.
- TEL (PLDT)
- GLO (Globe Telecoms.)
- MER (Manila Electric Company or Meralco)
- BPI (Bank of the Philippine Islands)
- SMC (San Miguel Corp.)
- SM (SM Investments Corporation)
- AC (Ayala Corporation)
There are other not mentioned here, these are just from the top of my head. P.S. It is not a recommendation but just an example.
I hope this short article provided you some basic understanding about dividends in the Philippine stock market. If you find it useful, kindly share to others to help them too.
Until next time. Cheers!
great information. very well explain. thank you
You’re welcome Jack!
Hi. I just wanna ask how do you automatically reinvest the dividends you receive? Is there a way like that in COL website? Thanks!
Hi Blessie, you can can do that by enrolling in COL’s EIP if you’re COL customer. Cash dividends will be automatically added to your funds, if you enroll on EIP, you can set date, what shares and how much you want to invest automatically. When the schedule came, it will automatically purchase that shares with the amount you specified. This way, you’re automatically re-investing the cash dividend you got. See more about EIP here. Hope it helps. Thanks!
Hello, it’s a good guide. thanks for the information but i want to ask something i’m still a student and i
want to invest my money in stocks for my future. I want to ask about the dividends. They give dividend every payment date? even though the company is not doing good ? or they just give it if the company is doing good only?
It depends on the company. Sometimes there are company issue dividends even not performing good but most of the time companies issue dividends only when the performance and income are good. Thanks!
I see. Thanks for your reply.! I will consider the example of companies you mentioned and i will try to look more about it and other companies. Anyway where can i find the list of company that sell stocks and their prices?
You can find them all in the PSE website.
Sir, for cash dividend po, after po mareceive ng payment, kailangan po ba magreinvest or isang beses lang po bibili ng share?
Depends on your goal. You can re-invest your dividends earnings to compound and make your money grow fast. Thanks!
Do Preferred Shares follow the same rule as Regular Shares when it comes to Ex-Date, Record Date, Payment Date?
Hi R2B2, this is only for public or common shares. Thanks!
hi sir. newbie question lng. 50% stock share ang dividend sa sm. what does this mean po? if i buy ba 10 shares later magiging 15 na shares ko later? thx in advance
Yes, in the ex-date. But most likely, the price will drop a little bit as what I shared on the article. Thanks!
Hi sir. How often this companies give dividends? Once a year? Twice a year? And how many percent e.g PLDT as to current market? Thanks
Kailangan ko bang hintayin ang payment date para makuha ko ang stock o cash dividends? Paano kapag ibinenta ko na siya ng wala pang payment date? Wala ko makukuha?
Hindi na active yung writer nh blog na to huhu