Income through dividend stocks is a great way of building a passive source of income.
Searching for regular dividend payers
Unfortunately, not all publicly listed companies in the Philippine Stock Market (PSE) pay dividends. Additionally, it is also disappointing to know that only a handful of these companies pay regular dividends to its shareholders. Majority of the few dividend stocks are semi-annual and annual payers. In other words, if your goal is passive income through dividends choices are very limited.
In contrast, investors in countries such as the United States of America (US) and Canada are very fortunate they can build their portfolio and receive dividends more frequently such as quarterly or even monthly.
Pay yourself first and develop the right temperament as an investor
If you are an investor with a long-term horizon it doesn’t matter how frequent you receive dividends. What’s important is you invest regularly.
Establish strong fundamentals and develop a habit of investing consistently. Don’t let your emotions in investing overpower your decisions to sell your holdings during a market downturn.
Ask yourself, “Have I done my own research and laid down my solid fundamentals before partnering with this company? ”
If the answer is a big YES, then you will be able to avoid the strong temptations to sell your investments unnecessarily.
A savvy and intelligent investor takes advantage of the down market just like what we are experiencing during this COVID 19 pandemic where the economy is slowing down, as an excellent buying opportunity.
Receiving regular dividends not a lost cause after all for Philippine investors
Philippine investors are relieved to know that there are four companies that have been proven to pay their shareholders quarterly for a couple of years now.
Certainly, these four companies will be a great addition to your portfolio if regular dividend income is your main objective.
On top of that, these are among the top 30 blue-chip companies of the Philippine Stock Index (PSEi)
What are these four companies listed on PSE?
Globe Telecom Inc (GLO) is a household name that most of the Filipinos are familiar with. It is a telecommunication company that provides mobile, home phone and internet services. The company is valued at P245.9 billion pesos.
Sector: Communication Services
Industry: Telecom Services
Price = P2,130 / share
P/E Ratio = 14.27
Return on Equity (ROE) = 30.14% Trailing Twelve Months (TTM)
Debt/Equity Ratio = 1.58 TTM
3 Year Revenue Growth = 9.72
3 Year Net Income Growth = 11.94
Dividend Yield = 4.66%
Payout Ratio = 56.1% TTM
Minimum Investment at current price: P2,130 x 5 (board lot) = P10,650 pesos
San Miguel Corporation (SMC) It is a food, beverage, and packaging company. The three primary business segments include beer and nonalcoholic beverages, spirits, and food. The company is valued at P238 billion pesos.
Price = P100 / share
P/E Ratio = 15.27
Return on Equity (ROE) = 2.26% Trailing Twelve Months (TTM)
Debt/Equity Ratio = 2.72 TTM
3 Year Revenue Growth = 14.43
3 Year Net Income Growth = -10.03
Dividend Yield = 1.4%
Payout Ratio = 45.9% TTM
Minimum Investment at current price: P100 x 10 (board lot) = P1,000 pesos
BDO Unibank Inc.(BDO) is the biggest bank in the Philippines valued at P 666.72 billion pesos. It is a full-service bank that provides a variety of products and services. BDO is a member of SM Group, one of the large conglomerate companies in the Philippines.
Sector: Financial Services
Price = P98.5 / share
P/E Ratio = 15.64
Return on Equity = 13.59% TTM
Debt/Equity Ratio = 0.54 TTM
3 Year Revenue Growth = 16.67
3 Year Net Income Growth = 18.99
Dividend Yield = 1.22%
Payout Ratio = 12.2% TTM
Minimum Investment at current price: P98.5 x 10 (board lot) = P985 pesos
San Miguel Food and Beverage Inc.(FB) The company and its subsidiaries are involved in poultry, and livestock operations, flour milling, dairy, coffee operations, franchising, young animal ration, manufacturing, and distribution. The company is valued at P 404 billion pesos.
Sector: Consumer Defensive
Industry: Food Distribution
Price = P68.5 / share
P/E Ratio = 22.08
Return on Equity = 20.47 TTM
Debt/Equity Ratio = 0.78 TTM
3 Year Revenue Growth = 40.70
3 Year Net Income Growth = 7.44
Dividend Yield = 2.34%
Payout Ratio = 54.8% TTM
Minimum Investment at current price: P68.5 x 10 (board lot) = P685 pesos
Note: Shareholders are expecting to receive dividends quarterly (March, June, September, and December)
What do these stats mean?
The figures above showed that these companies are at fair value trading at PE equal or under 20 with payout ratios of below 60 which means that these companies are holding cash and capable of paying future dividends. There is no doubt in my opinion that these are four of the most solid and stable dividend stocks in the Philippine Stock Market (PSE).
Having said that, “Past performance does not guarantee future results.” In any case, exercise due diligence on all your investment decisions.
Note: This is an update of my previous post “Philippine stocks that pay quarterly dividends”.
Finally, these four companies are excellent additions to your portfolio as a Filipino citizen, Overseas Filipino Worker (OFW), or a former Balikbayan with Filipino citizenship and building a passive income through dividends.
Being a patient and disciplined investor by consistently investing through peso cost averaging and reinvesting all dividends regularly, you will have an adequate passive income through dividends that can supplement any pensions you may have or even as a primary source of income.
Disclaimer: I am in No way affiliated to any of the companies mentioned above. The content of my blog is for entertainment and/or informational purposes only and should not be seen as any kind of advice.