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Best Dividend-Paying Companies in the Philippine Stock Market

Read more http://www.smartpinoyinvestor.com/2012/04/best-dividend-paying-companies-in.html

If you remember from one blog here, there are primarily two ways of earning and making money in the stock
market – capital gains or when the price of a stock increases; and dividend which is part of the earnings by
company divided among its shareholders.
Now below is an article from Inquirer Business about dividends considering the present performance of the
Philippine Stock Market. It also adds to what we already know about dividends:
“Dividends, which are paid by companies regularly to shareholders and taken
from earnings, are one way of boosting shareholder value. Dividend payments
can also be a gauge of financial well-being of companies. They may come in the
form of cash, stock, or property. Property dividends—which can be shares in a
subsidiary company or physical assets—are rare, though. Over the past 12
months, the only Philippine companies that have distributed property dividends
are Manila Electric Co. and RFM Corp.”
Now we know what a property dividend is! J
image from moneygurado.blogspot.com

Here are some of the highlights of the article sharing some of the analysts’ expectation of the performance of
the Philippine Stock Market
 Steady and increasing dividends from companies that are past their high-growth phase are often an indication
of sound fundamentals and say a lot about future prospects.
 The Philippine companies that are likely to declare good dividends this year include those from the telecom,
utilities and media sectors
 For this year, Philippine Long Distance Telephone Co., Globe Telecom Inc., Bank of the Philippine Islands,
Semirara Mining Corp. Aboitiz Power Corp., Manila Water Co Inc., First Philippine Holdings Corp., ABS-
CBN Corp. and GMA Network Inc. are among companies that are likely to declare good dividends, she says.
Filinvest Land Inc. also offers high rate of dividends.
Read the whole article below: http://business.inquirer.net/55267/dividends-as-added-attraction-to-investors
For dividend-oriented stock investors, the rest of 2012 has a lot of promise as many analysts project stable, if
not higher, payouts from listed companies.
Steady and increasing dividends from companies that are past their high-growth phase are often an indication
of sound fundamentals and say a lot about future prospects. The Philippine companies that are likely to declare
good dividends this year include those from the telecom, utilities and media sectors, analysts say.
Amid low interest rates and volatile markets, dividends are likely to be an incentive for new and existing
investors to own stocks.
“You can view it from this perspective. If a stock is cheap in terms of valuation (low price-to-earnings, low
price-to-book ratios) and I like its long-term fundamental outlook, I would be more inclined to buy it if it can
give me a cash dividend that will match what I expect to earn from my placement in the bank,” says April Lee-
Tan, research head at CitisecOnline.
Lee-Tan adds that “cash dividends should at worst be flat compared to 2011,” noting that companies in general
have room to increase cash dividends provided that profits increased in the past year.
Likely big payers
For this year, Philippine Long Distance Telephone Co., Globe Telecom Inc., Bank of the Philippine Islands,
Semirara Mining Corp. Aboitiz Power Corp., Manila Water Co Inc., First Philippine Holdings Corp., ABS-
CBN Corp. and GMA Network Inc. are among companies that are likely to declare good dividends, she says.
Filinvest Land Inc. also offers high rate of dividends because its share price is depressed and valuation is
cheap, she adds.
Dividends, which are paid by companies regularly to shareholders and taken from earnings, are one way of
boosting shareholder value. Dividend payments can also be a gauge of financial well-being of companies.
They may come in the form of cash, stock, or property. Property dividends—which can be shares in a
subsidiary company or physical assets—are rare, though. Over the past 12 months, the only Philippine
companies that have distributed property dividends are Manila Electric Co. and RFM Corp.
Investment driver
Companies that are still growing, however, rarely offer dividends as they opt to reinvest all of their profits to
help sustain high growth.
“Dividends are becoming an important driver (of investments) especially in this all-time low-interest rate
environment,” says Paul Joseph Garcia, senior vice president and equity fund manager at Bank of the
Philippine Islands. He points out that the share of dividends to the total return of the stock market over the past
10 years was about 40 percent. Although capital appreciation is the main source of returns, dividends are
proving to be a significant contributor.
Also, dividends are taxed 10 percent for resident individual investors and zero for corporate investors
compared to 20 percent withholding tax for fixed income investments, he says.
“Dividend play will be important this year,” says Garcia. “Investors now are very conscious about investing in
companies that give dividends. Right now, that’s the trend that we’re seeing.”
Market participants say one can’t blame investors for this trend. Last year, for instance, the Philippine Stock
Exchange Index registered a 4.5-percent rise while the average dividend yield was about 3 percent, resulting in
total return of around 7.5 percent. Dividend yield is calculated by dividing the annual dividends per share with
the price per share.
Impressive returns
This kind of return is indeed impressive considering the slower economic growth and challenging external
market environment last year as the eurozone debt crisis mounted.
In its listing of top dividend yields since 2009 in February, stock brokerage DA Market Securities ranked as
No. 1 infrastructure holding firm Metro Pacific Investments Corp. with 9.34 percent average dividend yield,
followed by PLDT (7.32 percent), Globe (6.78 percent), GMA 7 (4.14 percent) and Pepsi Philippines (3.82
percent). Also on the top 10 of its list were ABS-CBN, China Bank, Nickel Asia, Semirara Mining and Bank
of the Philippine Islands. In all cases, those dividend yields either compensated for the decline in stock prices
or enhanced the total returns.
Jose Vistan, research head at AB Capital Securities, sees dividend yields declining this year due to flat
earnings growth last year, although they may be higher in absolute or peso terms.
He cautions that when it comes to investing, dividends should be an added, rather than the main, attraction.
“It’s hard to find companies that pay dividends that are higher than the money market,” Vistan says. “In this
low interest-rate environment, investors would like to invest in the dividend-paying companies as an added
incentive.”

Read more http://www.smartpinoyinvestor.com/2012/04/best-dividend-paying-companies-in.html