📈 Not All Stocks Just Sit There. Some Pay You

We’ve been told forever that stocks only pay off when you sell them. But what if I told you there’s a way to earn without selling a thing? A strategy where companies literally hand you a share of their profits just for staying invested. Yep, that’s dividend investing, and it works differently than what most people imagine when they think of the stock market.

Let’s unpack what dividend investing in the Philippines looks like.

In today’s edition, we’ll go over:

• What dividend investing is

• How it’s different from growth investing 

• Why dividend investing works in the PH context 

• How to pick dividend stocks 

TLDR;

The Bottom Line

• Dividends = passive cash flow. You’re not just waiting for stock prices to rise, you’re getting paid along the way.

• Different mindset than growth investing. Instead of chasing quick price gains, you’re focusing on consistency, stability, and long-term payouts.

• What to look for: Dividend yield in the 3–6% sweet spot, healthy payout ratios (40–60%), and companies with regular quarterly or semi-annual payouts.

• PH advantage: Big blue-chip names (PLDT, Meralco, BPI) have long dividend histories, and the PSE Dividend Yield Index is a great cheat sheet.

• How to start: Open a brokerage account, check dividend history, buy before ex-dividend dates, reinvest payouts if you can, and (most importantly) be patient.

The content

What is Dividend Investing?

Dividend investing is basically this: you buy shares of a company, and every so often, they hand you a piece of their profits (most likely cash in your account) just for holding.

Think of it like rent money you collect as a shareholder. Some companies do this quarterly, some annually, some not at all. In the Philippines, big names like Metrobank, Meralco, and BPI are known for paying dividends regularly.

How is it Different from Other Types of Investing?

Most of the time, people buy stocks hoping the price goes up (capital appreciation). That’s growth investing. Dividend investing is not just betting on price also looking for steady payouts.

• Growth investing = Buy now, sell later for profit.

• Dividend investing = Buy, hold, and get paid along the way.

🇵🇭 Why Dividend Investing Works in the PH Context

• Mature blue-chip companies dominate. Utilities, telcos, and banks make up a big part of the local market, and these companies often pay stable dividends.

• The PSE Dividend Yield Index. If you don’t know where to start, the Philippine Stock Exchange actually tracks the 20 highest-yielding dividend stocks. It’s a quick “cheat sheet” for investors.

• Predictable regulation. Philippine companies are required to disclose dividend policies and schedules, so it’s easier to check payout history before investing.

Actionable Tips for You

How Do You Pick Dividend Stocks?

Not all dividends are created equal. Here’s what to actually look out for:

1) Dividend yield: Think of dividend yield like interest on a savings account, except it’s based on the stock price (annual dividends ÷ stock price). If a stock is worth PHP 100 and pays PHP 5 in dividends for the year, that’s a 5% yield. Easy math: PHP 5 ÷ PHP 100.

📊 What’s a “Good” Dividend Yield in PH?

• 3–6% → This is the sweet spot. Sustainable, realistic, and common among blue-chip PH companies.

• 7–9% → Attractive, but check the company’s payout ratio and financial health. It could be sustainable (like PLDT some years), but double-check if earnings can back it up.

• 10%+ → 🚨 Caution. Yields this high usually mean the stock price has dropped a lot (which inflates the yield) or the dividend isn’t sustainable long term. Don’t just chase these blindly.

Rule of thumb: it’s better to have a steady 4–5% yield you can rely on every year than a flashy 12% yield that vanishes when the company struggles.

2) Payout consistency: A good dividend stock pays regularly and on schedule, even in tough times. In the PH, some companies pay:

• quarterly (every 3 months)

• semi-annual (twice a year)

• annual (once a year)

  If you’re after consistency, quarterly or semi-annual payouts are ideal.

3) Payout ratio: This is how much of the company’s profits are given away as dividends. For example, if a company earns ₱100M and pays ₱50M in dividends, that’s a 50% payout ratio. A 40–60% payout ratio is considered healthy: it means the company is rewarding shareholders but still reinvesting enough back into the business to grow.

How Do You Get Started?

1. Open a brokerage account – COL, BPI Trade, FirstMetroSec, etc.

2. Check dividend history – See if your target companies consistently pay.

3. Buy shares before ex-dividend date – If you want to be eligible for the payout. Check here a comprehensive list of PH companies and their dividend info

4. Decide what to do with dividends – Cash them out or reinvest them to buy more shares (which compounds over time).

5. Be patient – Dividend investing isn’t a get-rich-quick thing. It’s slow, steady cash flow + growth.
   

Stuff Worth Sharing

The Link Lowdown

• Mutual funds: smart move or waste of time?: Missed it? Check our last week’s issue

• We also wrote a beginner’s guide to stock investing. Check it here.