Stocks may be “sexy” but your investment portfolio should never be composed of stocks alone. To understand why, read our article on The Importance of Diversification in Investing.
Aside from stocks, other investment assets that may be included in one’s portfolio include Bonds and other fixed income instruments; Pooled investment funds such Mutual Funds, Exchange Traded Funds or Unit Investment Trust Funds; Real Estate; Time Deposit Accounts; and Gold and other precious commodities, among others.
Another type of investment that can be added to one’s portfolio is Preferred Shares and this is what we will discuss in this post. Previously, we wrote a few introductory articles about Preferred Shares to help you understand this type of investment.
Our guide on Preferred Stocks:
Basically, a Preferred Stock is an investment security that is a hybrid between debt and equity. With its debt component, preferred shares normally give investors a fixed, regular income called dividends. The equity component, meanwhile, refers to the rights accorded to the investor as part-owner of the company.
Dividends in Preferred Shares
Most preferred shares pay Dividends, a fixed amount of income that investors receive in specific future periods. This is usually a fixed percentage of the par or issuance value of the stock, although some preferred shares have floating rates, such as Globe Telecom’s Preferred A Shares (GLOPA) whose dividend rate is 2% on top of the average 30-day PDST-F rate computed by the Philippine Dealing Exchange.
Take note that although Preferred Shares pay a fixed dividend regularly, the distribution and payment are still dependent on the approval of the company’s Board of Directors. It is possible that the BOD may defer the payment of dividends, especially when the company is cash-strapped or is losing money. This means you won’t get paid that year.
However, if the shares are cumulative, even if you weren’t paid that year, the dividends will accrue and will be paid to you (together with that year’s dividends) in a succeeding period once the BOD approves the distribution.
List of Preferred Shares in the PSE
If you are interested to invest in preferred shares, you might find our matrix below useful when choosing which ones to invest in. In the past years, several preferred shares have been delisted already and the ones in our table below are the only ones traded, based on our research in the PSE and Bloomberg.
Do note that some preferred shares are not actively traded — and you can see this in the column “Last Traded on”. If a stock is not actively traded, it might be difficult for you to easily buy and sell that security so take note of that liquidity concern as well when you make an investment decision.
|Company / Preferred Shares||Stock Code||Dividend Rate (%)||Latest Stock Price||Last Traded on|
|Allied Banking Corporation - Pref. "A"||ABC||15.00%||1,000.00||Feb. 27, 2014|
|Ayala Corporation - Preferred Class "A"||ACPA||8.88%||500.00||Nov. 8, 2013|
|Ayala Corporation - Preferred Class "B"||ACPB||5.25%||523.00||Feb. 26, 2014|
|Benguet Corporation - Convertible Pref. "A"||BCP||8.00%||22.65||Nov. 5, 2012|
|DMCI Holdings, Inc. - Preferred||DMCP||1,400.00||Jan. 24, 2008|
|First Gen Corporation - Series F Preferred||FGENF||8.00%||111.50||Feb. 25, 2014|
|First Gen Corporation - Series G Preferred||FGENG||7.808%||112.00||Feb. 26, 2014|
|First Phil. Holdings Corp. - Preferred Series B||FPHP||8.72%||101.40||Mar. 26, 2013|
|Globe Telecom, Inc - Preferred "A"||GLOPA||Floating (Based on 30-day average PDST-F plus 2%)||5.00||Feb. 27, 2014|
|Leisure and Resorts World Corp. - Preferred||LRP||8.50%||1.02||Feb. 26, 2014|
|Petron Corporation - Perpetual Preferred||PPREF||9.5281%||107.30||Feb. 26, 2014|
|PLDT - 10% Preferred Series HH||TLHH||10.00%||10.00||Feb. 26, 2014|
|San Miguel Corporation - Series 1 Preferred||SMCP1||8.00%||74.00||Feb. 26, 2014|
|San Miguel Corporation - Series 2-A Preferred||SMC2A||7.50%||75.60||Feb. 26, 2014|
|San Miguel Corporation - Series 2-B Preferred||SMC2A||7.625%||77.10||Feb. 26, 2014|
|San Miguel Corporation - Series 2-C Preferred||SMC2A||8.00%||78.50||Feb. 26, 2014|
|Swift Foods - Convertible Preferred||SFIP||1.16||Feb. 19, 2014|
Must read these other awesome educational articles!
- Should I invest in Preferred Stocks?
- Investment Objectives: Capital Appreciation, Preservation, Current Income, Total Return?
- Relationship between Interest Rates and Inflation
- Investment Options and Investment Products in the Philippines