Every year, we compile a list of publicly listed Philippine companies that pay the highest amount of dividends. As we have explained in our previous articles (see Top 10 Stocks with Highest Dividend Yields – 2011 and High Dividend Stocks in the Philippines – 2012), dividends are another way for stock investors to make money in the stock market.
Dividends are distribution of earnings to a company’s shareholders. These dividends may come in the form of cash, stocks or property. All shareholders on record are entitled to receive dividends. The shareholders on record are determined based on the Ex-Date, also called the Ex-Dividend Date, which is the first day when buying a stock DOES NOT entitle the buyer to the dividends.
Dividends Guide and Tutorial
Learn more about Dividends in our Stock Guide below:
- What you need to know about Dividends in stock investing
- What is Ex-Date, Ex-Dividend Date, Record Date?
- Tax on Cash Dividends
- Property Dividends in the Philippines
In the past months, stock prices have fallen to the point that stock investors are booking losses. Dividends, as another form of income, provide a cushion to investors by offering tangible returns at a time when capital losses are being incurred. Thus, aside from the capital appreciation potential of a stock, it is also wise to take a look at the dividend distribution policy of a company.
To easily compare the dividend distribution policies of a variety of companies, we can use the Dividend Yield ratio — a simple formula that gives us an idea how much income (in the form of dividends) we receive as a percentage of the current stock price. Of course, the higher the Dividend Yield, the higher is our potential return.
The Dividend Yield is computed using the formula Dividends Received divided by Current Stock Price. Multiply this by 100 and you get the Dividend Yield in percentage form. If we’re only talking about Cash Dividend Yield, we limit our numerator in the formula only to Cash Dividends received from the company.
Cash Dividend Yield of PSE Stocks in 2013
Sources: Bloomberg, Angping Securities, BPI Trade