Dividend-paying stocks in 2008

GMA7 paid out dividends too.

To better appreciate and understand deeper the nature of payments of company dividends, investors must be aware that:

Under the Corporation law, it is ALWAYS the OBLIGATION of a corporation to either:

1. Distribute the company earnings in the form of dividends to its entitled shareholders or

2. (As stated in the article) To apply the company earnings for business expansion and growth, or

3. Numbers 1 and 2 may take place at the same time

Also take note that it is ILLEGAL for a corporation to declare dividends without company earnings ( Retained Earnings).

In many cases, the declaration and distribution (payment) of cash dividends is almost always predictable long before the announcement is made because the company's policy and treatment of its earnings are already known by its stockholders. For example the Manila Bulletin is regularly paying dividends to its shareholders for many many years instead of applying these earnings for business growth.

San Miguel Corp. is also another company that regularly pays dividends to its stockholders.

If you want to buy stocks primarily for the purpose of receiving dividends, you could actually know these beforehand which of these companies. In fact once a corporation declares dividends, interested buyers has still time to buy shares if they so desire.

Generally, those companies that pay regular dividends are blue chip companies and therefore there should be less expectation for its capital appreciation.

Personally I am not attracted to companies that pay dividends because I prefer good quality growth stocks.

Also to clarify:

The increase or decrease in stock price does not necessarily mean a CAPITAL APPRECIATION/GAIN or a CAPITAL LOSS.

Stock price per share may decrease upon stock dividend issuance but total cost of investments remains the same. Stock price per share may also increase during stock splits but total cost of investment remains the same.

So in this case, investors must not make immediate conclusive statement that his stock has appreciated in value just because the stock price per share has gone up. On the other hand, he should not be quick to say that his stock has depreciated in value just because the stock price has gone down. He should know why.

INDEXrider

I like NRCP, it has a 100% of last years earnings cash/stock dividend policy.
Check this out here... http://www.nrcp.com.ph/faqs_transactions.html#8
Much much better than time deposits, especially this time that its board stock price is at bargain level.

what good is a dividend when the stock price is down 30% to 40%? I don't think PLDT will go to 3000 pesos in the near future.

Rick, dividends unlike cap gains provide you with passive income.

If you bought PLDT aka TEL (@ 1K/share) five years ago, you would have netted around approx 17% thru dividends last year. Where can you find an instrument as safe and as passive that yields ~17% last year?

acn, what do we tell investors who bought pldt at 3100 pesos on Jan 2008? They lost 30% of their investment in 1 year. Even a 17% dividend would not cover their losses.

There is also a potential that companies cut dividend payment. I won't be the first time it happened especially in a global recession.

"acn, what do we tell investors who bought pldt at 3100 pesos on Jan 2008? They lost 30% of their investment in 1 year. Even a 17% dividend would not cover their losses."

-- If they ask me, I'd tell them to continue on their cost averaging and asset diversification. If they started their cost averaging on TEL years ago, their portfolio is still green (cap gains + dividends).

-- Now, if they only started investing last year, i'd remind them that dividend investing is for the long haul. Eventually, with dividend reinvestment, they'll be able to break even.

"There is also a potential that companies cut dividend payment. I won’t be the first time it happened especially in a global recession."

-- That is a risk yes. But so is subscribing to TDs.. buying bonds.. having different currencies.. trading the market, riding the gold bull.

-- We are talking about dividend investment here. We are not saying that other instruments are bad. In fact, it is prudent to diversify.

-- If you are against dividend investing, where would you rather put your money?

I've started buying some shares of GLO and BPI. Both are paying good dividends. I really like to buy some TEL too, but then I would be too heavy on telcos and TEL is now very expensive for me.

In the property sector I do have ALI. Still would add to my shares when I have extra cash.

acn"– If you are against dividend investing, where would you rather put your money?"

I never said I was against dividend investing. Buying stocks "NOW" for capital gains or dividend investing is much more riskier than in the past. Looking at the near future, there is a high risk that stocks will go down further.

I used my money to short the stock market.

i see.. i'm not good at forecasting so i'll stick with cost averaging and asset diversification.

good luck to all of our investments.

Ari Chio of GMA7's investor relations, emailed me to say that GMA7 also paid out dividends in 2008. :-)

As former shareholder of DGTL, let it be known that DGTL has never paid a dividend in the past. Also, AP (Aboitiz Power ) has paid a dividend last year and this Year, It is published in the newspapers.

Please get your facts straight , as the usual caveats or not ,people may be buying above mentioned stocks. Please do your due diligence to better infrom the investing public, otherwise, do not bother to write columns that are not factual.

gary

Whoa Gary. I said "here are SOME companies" that paid dividends last year, I didn't say the list was exhaustive.

However, I have to admit I committed an error with DGTL, as I misread the excel worksheet provided to me by a brokerage firm. Thanks for the information, I do appreciate it. Sorry about this guys. And yes, Aboitiz Power paid dividends last year.

Other than cash, dividends may also be in the form of property or stocks.

If you want cash dividends, wait for the company's announcement then that's the only time to buy the stocks taking note of the record date. That simple.

In the real world, cash dividends are not much of a big deal. In fact some (or many) investors may sell their existing shares even before the record date thereby forfeiting their cash dividends.

As earlier said, stock dividends, do not change the TOTAL investment value. Instead the total number of shares are increased but stock price per share decreased. So in effect, NO EFFECT.

In the short run, stock dividends are totally irrelevant. Possibly advantageous only in the long run.

Just to add more points here, Warren Buffet's Berkshire Hathaway sees little logic to pay small amounts of dividends regularly.

For others like me, DIVIDENDS or NO DIVIDENDS is insignificant. What is important is CAPITAL APPRECIATION because if business is growing stock price should rise. That is the only measure of successful investing and we can all forget about ARTIFICIAL DIVIDENDS.

INDEXrider

Dividend payments from Philippine companies are paltry most of the time. This is why the dividend yield doesn't figure too prominently in my investment decision.

Dividend yield can cushion paper losses in the interim if a stock will be held long-term and the dividend is expected to remain more or less the same. Forecasting dividends, similar to forecasting a stock price, is at best, speculative.

Among the higher dividend-yielding companies are GLO, TEL, PLTL, BPI, URC, RLC,...and SECB, I think. To cut down on research work, one may choose to just focus on these issues. Among these, BPI has been the most consistent, since it has been paying dividends even during the previous economic contraction ( 2002-2003).

Companies can choose to cut dividends or not to pay any at all, depending on the perceived need to conserve cash or anticipated weakness of future earnings. Going forward I believe dividends of philippine companies will fall significantly.

Dividend payments may be suspended temporarily if a company needs cash to make significant acquisitions. For example, BPI and BDO may pay out lower dividends this year should any of the two acquire Philam. But long-term it could improve their valuation because of a new growth-driver for earnings and higher expected dividend yields.

If one is starting late in investment, or one does not have much time to closely follow the market, investing in high-dividend yielding stocks is a good way to start. For younger, more adventurous investors, consider more tactical, active allocation strategies. Just my opinion.

Cash Dividends paid to shareholders are always better , as it will give them chance to deploy the cash to other investments, as management may not always use the cash to best advantage, or worse pursue capital expenditures that wll not add a peso of value, those companies that has long history of cash dividend pay out has demonstrated able and competent management. tel,glo,bpi to name a few, . for a defensive investor purchasing stocks , this must be one of the requiremements prior to purchase, those companies that has paid dividend for the past 10 years is likely to continue paying for the next ten.

gary

Asset diversification will always result in average results or worse . Look at the major index funds right now, all are in horrendous negative territory showing - negATIVE 40% return on 3 year average. A know nothing investor can do better than that just by throwing darts on the board , then buying those companies he hits. An inteliigent investor however, will concentrate his precious funds on select companies after careful study. (study , i mean company financials, business prospects, dividend record,economic moat, not studying price histories or worse charts). To understand the market , do not look at the scoreboard but instead look at the game. If he is confident on the methods he has used in evaluation prior to purchase ,a 75% concentration of avialable funds can be commiitted on 2 to 4 companies with the remaining 25% in bonds / long term cash deposits.

gary

hello Salve, thanks yours, i apologize for mine, no disrespect intended. Keep up the good work, and more power to you!!!

gary

nvesting earnings into the company instead of sharing them with shareholders is a strategy many great companies like Microsoft used in its early years. Last year, here are s shopping bag manufacturer,

I agree with you. You have given to us with such an large collection of information. Great work you have done by sharing them to all

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Dividend payments from Philippine companies are paltry most of the time. This is why the dividend yield doesn't figure too prominently in my investment decision.
Dividend yield can cushion paper losses in the interim if a stock will be held long-term and the dividend is expected to remain more or less the same. Forecasting dividends, similar to forecasting a stock price, is at best, speculative.
Best regards, Alex, CEO of youtube downloader

This doesn’t mean that companies that don’t pay regular dividends are fundamentally weak.
Best regards, Katya, CEO of cd rw burner, red hat iscsi initiator

In a previous job, I helped manage large individual-investment portfolios. Some were nine-figures large. The biggest investing lessons I took from studying those successful portfolios are: Buy dividend-paying stocks and, most importantly, buy them early.

See, these portfolios contained long-term winners like Johnson & Johnson (JNJ, news, msgs), which, in most instances, had been bought decades earlier and by then were paying their holders tens of thousands of dollars in dividend income.

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portfolio owners didn't just pick stocks like J&J out of a hat of blue chips and hope for the best. No, they took the time to select companies with sustainable business models and long track records of increasing shareholder value through capital gains and dividend growth.

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Nice blog.
Thanks for sharing about Dividend-paying stocks in 2008.

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