Dividend Investing: Best Dividend Stocks in the Philippines

Last Updated – Nov 5, 2023 @ 12:49 pm

If you want to diversify your investment portfolio, dividend stocks are an amazing choice.

This investment instrument is amazing for individuals who want to boost their income – something everyone wants to have in times of high inflation. 

But with tons of choices for dividend stocks in the Philippines, you may just be overwhelmed. This is exactly why you need this guide.

On this page, we’ll share the best dividend stocks in the Philippines to choose from.

What Are Dividend Stocks?

As its name implies, dividend stocks refer to companies that pay out a part of their regular earnings to shareholders. These mature and stable companies usually have an excellent track record in paying dividends throughout the years.

For example, if Company A has an annual dividend of Php5 per share, it means that an investor with 1000 shares will get a dividend payment of Php5,000.

Recommended Reading: How to Invest in the Stock Market

How do you receive or claim dividends?

In the Philippines, dividends are paid in the form of cash or stocks. You will usually receive notifications from your stockbroker if you are eligible to receive dividends.

For cash, it will be credited to the account holder’s trading cash balance. Meanwhile, stock shares will be reflected in your portfolio.

Things to know about Dividends

Are you new to the world of dividend investing? Here are some terms you must be familiar with.

Ex-div date

The ex-dividend date refers to any holder of a share at the end of the trading day before this date will receive a dividend. When you buy on the ex-div date, you will not be entitled to any dividends.

Payable date

This refers to the date when dividend yields will be paid.

Record date

Those not registered as stock owners as of a certain date will not be given dividends.

Dividend yield

This is the ratio equivalent to the company’s annual dividend payments compared to the current price of the stock.

The annual dividend is divided by stock price. The higher the dividend yield is, the higher money you will receive as a dividend.

However, looking at the dividend yield alone to see which companies to invest in is not enough. You must also analyze other factors of a company’s health instead of simply relying on the div yield alone.

Dividend payout ratio

This is the company’s proportion of earnings that are paid out to shareholders as dividends. To get this, you must take the company’s dividends per share and divide it by the earnings per share.

Examining this ratio is extremely important because it tells you how much of a company’s profit is given to shareholders vs. how much is retained to support and grow the business further.

Remember:

It is also important to note that there are companies that don’t pay dividends. Keep in mind that investors make money through capital gains (selling appreciated stocks) or through dividends.

Therefore, some companies choose to be growth-oriented and not offer any dividends. This is common with new companies, as well as established companies that have aggressive expansion targets.

Instead of distributing their profits, they will simply be reinvested to grow and appreciate in the future. This type of strategy usually attracts investors who focus on stock prices.

Pros & Cons of Dividend Investing

Just like any other investment instrument, dividend investing has its pros and cons. To help you find out if this type of investment is right for you, we’ve gathered its advantages and disadvantages below.

Pros

It helps you generate passive income

If your goal is to get additional passive income through investing, dividend stocks are perfect for you. It works just like interest from a bank account, although there is potential for greater profit.

Expecting quarterly payouts from companies is a good decision since most companies also try hard to keep their dividends consistent because this is one of the most integral factors that keep their stock price competitive.

You can leverage compound interest to increase your wealth

Compounding refers to using your earnings to generate more money.

It is one of the best ways to increase your wealth because it won’t require you to invest additional money. You simply have to let your earnings do the work for you.

When it comes to dividend investing, you can use your dividend earnings to get more stocks. Therefore, you’ll earn more money in the long run because every stock you purchase will give you its own dividend.

By leveraging exponential growth, your returns will grow at a fast rate.

You can take profit through dividends and selling

When it comes to dividend stocks, you can take advantage of the various ways you can profit from them. For example, you can take a profit through regular payouts.

Another way to take a profit is to sell your stocks for a higher price. Because these companies are already established and stable, their stock price will rise over time.

Cons

There are still risks involved

Just like other investment instruments, there are still risks when it comes to dividend stocks.

The dividend payout ratio of companies reflects how much of their earnings are paid out to shareholders compared to the amount they keep.

The reality is, if a dividend payout of a certain company is too high, it won’t be sustainable for them and it may lead to the business cutting or eliminating its dividends in the future.

There is less potential for huge gains

Every investor should know this downside when it comes to investing. Eventually, there will be a cap on your returns.

While you may still receive a sizable passive income, you have to know that even the best-performing stocks in the world won’t pay out 100% of your investment in a year.

If you are following a high-growth stock strategy, you may experience massive losses or amazing gains.

For example, a person who bought a ton of DMCI Holdings stocks in 1995 would be immensely wealthy by now.

Buying high-dividend yield stocks will not lead to the same growth as the example mentioned above. It is also easy for dividends to decrease value over time due to changes in the company’s strategy.

There is a disconnect between company growth and dividends

Another major downside to dividend investing is the disconnect between the growth of companies, and the dividends paid to investors.

Keep in mind that common stocks are not required to pay regular dividends, and they can cut them whenever they wish. This usually occurs when companies are struggling to keep their cash flow stable.

However, that’s not the only time it happens. Companies may also reduce their dividends even if they are doing well due to changes in their capital allocation strategy.

Companies may believe that the cash will have better uses such as paying debts or funding acquisitions, instead of it being used to pay shareholders.

Also Read: Value Investing Guide

Best Dividend Stocks to Invest in the Philippines in 2022

Take a look at some of the best stocks you can invest in. The price and dividend yields are listed as of August 15, 2022, at 11:59 a.m.

DMCI Holdings, Inc. (DMC)

Price: Php9.90
Dividend Yield: 4.85%

This is one of the largest conglomerates in the Philippines. It covers construction, power, water distribution, and property development.

Semirara Mining and Power Corp contribute around 50% of its total net income. Meanwhile, their 25% interest in Maynilad Water Holdings makes up 16%, and DMCI Property Developers make up 20%. D.M. Consunji, Inc., the company’s engineering arm, makes up only 10%.

In the previous year, this stock showed a solid recovery from the pandemic, which prompted its management to double the dividends of shareholders from Php0.48 in 2022, to Php 0.96.

SM Investments Corp. (SM)

Price: Php855
Dividend Yield: 0.73%

This stock includes all business segments of the SM group of companies, including property, banking, retail, and equity investments. ‘

Considering most Filipinos are familiar with this brand, it’s no question why investing in it is a great choice. With over Php 1 trillion market cap, it’s one of the biggest companies in the PSEi.

SM is one of the best stocks for people with a long-term investment strategy. Its three companies, BDO, SMIC, and SMPH comprise 30% of the Philippine stock market index value. It also has the ripe foundation for impressive earnings and generous dividends.

Ayala Corporation (AC)

Price: Php741.50
Dividend Yield: 0.93%

Ayala Corporation is another major player in the Philippines. In fact, it is the parent company of some of the biggest companies such as Globe, BPI, AC Energy and Infrastructure, and Ayala Land.

With over Php 420 billion in market capitalization, it’s one of the best blue-chip companies in the country.

SM Prime Holdings (SMPH)

Price: Php 38.45
Dividend Yield: 0.25%

This is SM Group’s property developer arm, and it’s one of the biggest developers in Southeast Asia. It has over 78 malls in the Philippines, and 7 in China.

SM Prime Holdings also manages hotels, convention centers, residential properties, office buildings, and commercial properties.

This stock is the largest real estate company listed on the PSE (in terms of market cap). Considering this, you can be sure that it will continue to expand in the future.

Learn More: How to Invest in Real Estate in the Philippines

Semirara Mining and Power Corporation (SCC)

Price: Php41.00
Dividend Yield: 3.66%

This is the largest coal producer in the country, as well as the only power producer in the Philippines that owns and mines its coal/fuel source.

SCC operates the most modern and largest pit mine in the Philippines, which has an operating capacity of 16 million metric tons of coal annually. Its revenue comprises 35% power revenues, and 65% coal sales.

SPC Power Corporation (SPC)

Price: Php11.30
Dividend Yield:3.60%

This power generation and distribution company operates in Cebu, Iloilo, Bohol, and Naga.

Formerly known as Salcon Power Corporation, SPC Power’s revenues are made up of power generation at 67%, and power distribution at 33%.

In recent years, its revenue has been steadily growing. Although it fell during the pandemic, it recovered by 34% in 2021.

LT Group (LTG)

Price: Php9.18
Dividend Yield: 13.07%

The LT Group is the holding company of Lucio Tan, one of the most prolific business tycoons in the country.

It fully owns Eton Properties, Tanduay – the third largest distilled spirits producer in the Philippines, as well as Asia Brewery Incorporated. It also owns a 46% indirect stake in Philip Morris Fortune Tobacco, and 56% in Philippine National Bank.

Almost half of the revenues of the LTG come from PNB. However, Asia Brewery and Tanduay have been showing signs of steady growth over the past decade.

It even went from Php40 billion in 2010, to a whopping Php 94 billion in 2019.

International Container Terminal Services (ICT)

Price: Php 184.30
Dividend Yield: 3.56%

ICT is the leading terminal operator in the country, with various port facilities in 20 locations across Europe, Africa, the Americas, Asia Pacific, and the Middle East.

Because it is a one-of-a-kind stock as it is the only terminal operator industry in the top-listed stocks in the PSEi, it is extremely promising.

This year and in the future, port facility and terminal expansion will surely boost their revenue.

Jollibee Foods Corporation (JFC)

Price: Php 231.80
Dividend Yield: 0.85%

If there’s one brand that’s almost synonymous with being a Filipino, it’s Jollibee. Considered the leading fast food chain in the Philippines, JFC is set to expand its franchise model to more locations across the globe.

JFC also has subsidiaries of other popular fast food chain brands such as Greenwich, Mang Inasal, Red Ribbon, Chowking, Burger King, and many more. This makes it a great investment for individuals who want to focus on the food business.

While the stock is considered bullish, the pandemic caused a severe decline in its value. This means now is a great entry point because it may reach another all-time high soon.

Related: Best Franchise Business Opportunities in the Philippines

Premiere Leisure Corporation (PLC)

Price: Php 0.430
Dividend Yield: 11.68%

This is a gaming investment company owned by the SM Group through Belle Corporation. Premiere Leisure Corporation has a partnership with Melco Resorts and Entertainment, one of the leading gaming resort developers and operators in Macau.

PLC also holds interest in City of Dreams Manila, as well as a 50.1% stake in the Pacific Online Systems Corporation, a publicly listed company that supplies lottery equipment and software to the Philippine Charity Sweepstakes Office or PCSO.

Of its total revenue, 33% is from commissions and equipment lease rentals, and 66% from its gaming revenues.

GMA Network (GMA7)

Price: Php11.02
Dividend Yield: 13.16%

This is one of the most successful broadcasting companies in the country. It is primarily engaged in radio and television broadcasting, but they also have production programs geared toward domestic and international audiences.

GMA also has other related businesses, particularly in movie making, marketing, post-production services, and other aspects that compliments the media industry.

Panasonic Manufacturing Philippines (PMPC)

Price: Php6.01
Dividend Yield: 4.14%

Originally established in 1963 under Festival Manufacturing Corporation, PMPC is a subsidiary of the Japan-incorporated brand, Panasonic Corporation.

It distributes electronic, mechanical, electrical, and electro-mechanical appliances, as well as other types of parts, components, batteries, machinery, and related products that bear its brand name.

Other products include air conditioners, washing machines, and refrigerators. This brand is already a household name in the Philippines.

Metro Pacific Investments Corporation (MPI)

Price: Php3.820
Dividend Yield: 2.68%

This is an investment management and infrastructure holding company with businesses in power, water, light rail, logistics, healthcare, and toll roads.

Considering most of the Philippine economy depends on infrastructure, MPI is an amazing choice especially because it holds a huge stake in Philippine toll roads. Aside from that, it also has regional investments in Indonesia, Thailand, and Vietnam.

It is also a shareholder of the biggest private-sector electric distribution utility company in the Philippines, Meralco. It also holds shares in Maynilad, Global Business Power, Metro Pacific Hospitals, Light Rail Manila Corporation, Metro Pacific Water, and MetroPac Movers.

Metropolitan Bank & Trust Company (MBT)

Price: Php51.65
Dividend Yield: 4.26%

As one of the biggest banks in the Philippines, Metrobank has cemented its name in the industry for over five decades, which makes it one of the best blue-chip stock options today.

 Metrobank has reported more than Php16.1 billion in net income in 2021, and it also maintains a healthy balance sheet.

With total deposits at over Php1.8 trillion and total assets over P2.4 trillion in 2021, Metrobank is an established dividend stock worth considering.

Related: Top Banks in the Philippines

How to Invest in Dividend Stocks in the Philippines

Here’s how you can invest in dividend stocks in the Philippines.

Step 1: Open an account with an accredited broker

You can open an account with trading platforms that are accredited by the Philippine Stock Exchange. Some of the most popular choices include:

• First Metro Securities
• COL Financial
• BDO Securities
• BPI Trade
• Philstocks
• AB Capital Securities

Step 2: Do your research

After you’ve opened an account with your broker of choice, you must do your research before investing.

Analyze and evaluate the stocks you are interested in, and assess their history in paying their shareholders dividends.

This is also the best time to make an investment strategy. Are you going to follow a short, medium, or long-term approach?

Step 3: Buy shares and receive dividends

After you’ve bought shares, you will be able to receive dividends. Most are paid quarterly.

Step 4: Lock in profit

After you’ve reached your target profit, or if you think the price of the stock has reached its maximum potential, you can decide to sell it.

Most investors use a huge chunk of their profit to reinvest in new stocks, especially if they see something with huge potential.

Tips to Follow If You Plan On Investing in Dividend Stocks

Here are some tips to keep in mind when investing in dividend stocks.

Do your research

Since dividend stocks are often seen as a more stable investment, it can be tempting to skip the research process.

However, it is important to take the time to fully research your investment first. By doing this, you could make sure that your money is working as hard as possible for you.

Have an emergency fund

Make sure to prioritize your emergency fund before proceeding to invest in stocks.

This way, you can be more prepared for your future, and you won’t be forced to pull out your high-performing stocks if you need cash.

Set a goal

Dividend stocks often pay out quarterly or annually. In order to make sure that your investment is working for you, be sure to set goals that you can review on a regular basis.

Make your goals SMART – specific, measurable, attainable, relevant, and time-based.  For example, “making money” as a goal is not enough. Instead, make it “earn 6% of my money back in 12 months.”

Choose sustainable dividends instead of the highest yields

Although it’s tempting to go with companies that give out the highest yields, it’s a better idea to look for stocks that give out sustainable dividends.

This could help the company avoid a reduction in the dividend payout. Using total yield as your guide instead of the sustainable dividend could result in a dividend cut in the future.

Determine your risk profile

Dividend stocks come with different risks that could affect the returns of your investment.

The risk will differ depending on how long the stock’s payouts have been consistent, as well as how much you are willing to lose on a certain investment.

If your portfolio is small and you are looking for steady returns over the long term, then you may be better off investing in established companies.

However, if you don’t have a long investment horizon, opt for companies that have not reached their maturity yet. Although this comes with greater risk, it often promises better rewards.

Reinvest dividends when you can

If your stocks pay out dividends, then be sure to invest these returns when possible, instead of spending them.

Doing this will help increase your annual income and also provide you with compounded growth.

Look for growth opportunities

Although established dividend companies sound like a safer choice for long-term investments, it can sometimes be a good idea to invest in dividend companies that are still on the verge of growth.

These companies are often in the expanding phase of their life cycle, which could correspond with high earnings and provide a higher yield in the future.

Hold for the long term

Dividend stocks are often meant for long-term investment, as this will provide you with the chance to earn steady returns.

Although the price of your stock may fluctuate from time to time, as long as the company continues to earn, your investment will continue to grow.

If you have invested in dividend stocks during times of market turmoil, it can be tempting to sell everything when your investments start to lose.

However, if you hold on to your investments, you could see them recover and continue to provide you with regular dividends in the future.

Although it may take a while before your investment yields results, the results are generally worth the wait.