Finding the Best Philippine Dividend Stocks in 2022
Last year, companies listed on the Philippine Stock Exchange (PSE) paid out more than PHP 402 billion to shareholders. That was a 17% increase in dividend payments from 2020.
Introduction
For investors looking for cash flow and lower volatility, dividends stocks can be a great investment option. That is because dividend stocks typically are mature companies with a track record of producing profits from which it can pay out dividends to its shareholders.
Below we indentify several dividend-paying stocks in the PSE, how to analyze various dividend stocks in the Philippines, and offer tips on how to find the best investment opportunities.
How to Analyze Dividend Stocks
Most investors looking at dividends stocks care about the dividend payouts. The dividend yield allows investors to compare dividend payouts between companies. It is calculated as total annual dividend payments per share divided by the current share price. For example, if a company pays a dividend of PHP 10 annually and its share price is PHP 100, then its dividend yield is 10%.
Most people want to receive as much dividends are possible. This idea is generally known as “chasing yield”. Some people might believe that a company that pays a heigher dividend yield is a better investment than one that offers a lower yield. In general, higher yields also represent higher risk. Conversely, companies with lower dividend yields are generally lower risk.
Finding Dividend Stocks
Finding dividend stocks that suit you depends on your risk tolerance. For example, if you are retired or dependend on your investments for income, then ideally you should look for lower risk, lower yield options. If you are a young professional with multiple streams of income and able to tolerate higher risk, then higher yielding stocks might be for you.
Below we list some of the favored options for dividend investing in 2022.
REITs
Real Estate Investment Trusts (REITS) are a new type of stock corporation which owns and operates income-generating real estate assets. In the Philippines, REITs are required to pay-out 90% of their income every year. REITs have been around in developed markets such as the US, Singapore or Japan for a long time. But, they are still quite new to the Philippines.
Below are some of the top REITs in the PSE:
| Name | Symbol | Market Capitalization | Est. Yield (2022) |
|---|---|---|---|
| RL Commercial REIT, Inc. | RCR | PHP 60 billion | 5.77% |
| AREIT, Inc | AREIT | PHP 58 billion | 4.96% |
| MREIT, Inc. | MREIT | PHP 38 billion | 5.70 % |
| Filinvest REIT Corp. | FILRT | PHP 31 billion | 6.60 % |
| DDMP REIT, Inc. | DDMPR | PHP 26 billion | 7.83% |
Telecom Stocks
Telecom stocks can also be a great way of generating dividend income. For risk-averse investors, stocks such as Globe Telecom (GLO) or PLDT Inc. (TEL) could be suitable options are they are stable, mature companies with a long history of paying dividends.
| Name | Symbol | Market Capitalization | Est. Yield (2022) |
|---|---|---|---|
| Globe Telecom, Inc. | GLO | PHP 284 billion | 5.00% |
| PLDT Inc. | TEL | PHP 537 billion | 4.80% |
Banks
Banks and financials also tend to be good dividend-paying stocks. However, these companies tend to be more volatile than telecom, utility or REIT stocks. Here are some of the top Philippine financial stocks:
| Name | Symbol | Market Capitalization | Est. Yield (2022) |
|---|---|---|---|
| BDO Unibank, Inc. | BDO | PHP 553 billion | 1.10% |
| Bank of the Philippine Islands | BPI | PHP 434 billion | 1.80% |
| Metropolitan Bank & Trust Company | MBT | PHP 238 billion | 5.50% |
| Union Bank of the Philippines | UBP | PHP 184 billion | 3.20% |
Finding Investment Opportunities
Ideally, if you are looking at dividend stocks you should have a long-term investment horizon. To find the best opportunities to buy or sell a dividend stock, it is important to follow and keep track of companies that suit you. We built PhilMarketCap for exactly that purpose.
After finding the companies that suit your investment profile, the next question might be when would be a good time to buy or sell. One way to find good entry or exit opportunities is by finding a stock with dividend yield that you believe is not in line with the risk.
Let’s take AREIT as an example. AREIT is considered by many as one of the safest REITs with some of the best real estate assets in the Philippines. Currently the average yield from REITs is around 4.5-5%. If you believe the dividend yield is too high relative to the risks and to the yields of comparable companies then you should be inclined to buy. Let’s say you believe that number is around 6.5-7%. If you are correct, the stock price should increase as other investors discover the attractiveness of the yield. You should be left with a handsome capital gain and meanwhile your investment should still pays you the relatively high yield. Conversely, if you believe that the current yield, say 2-3% for example, is too low relative to the risk, then you should be inclined to sell.
Ready to invest in PSE dividend stocks? We’ve built PhilMarketCap to help you become a better investor. Our app let’s you find and track your favorite Philippine stocks. Download the app today. Its fast, free and easy to use!
