Dividend

A dividend is a portion of a company’s earnings distributed to its shareholders, typically in the form of cash or additional shares. Dividends are one of the two main ways investors earn from stocks; the other is capital gains, or profit from price appreciation. A dividend isn’t just a payout. It reflects a company’s confidence in its cash flow, the maturity of its business, and how it prioritizes shareholder returns over reinvestment.

In the Philippines, dividend stocks play a particularly important role in investor decision-making. Although the market has fewer aggressive dividend aristocrats like in the U.S., the PSE (Philippine Stock Exchange) still houses many stocks that offer stable and sometimes generous dividend returns.

• Taxation 
  A 10% final withholding tax is applied automatically to dividends received by individual investors—both residents and resident foreigners. This is deducted before the dividend is credited to your broker account.
• Ex-Dividend Date
  Investors must purchase shares before the ex-dividend date to be eligible. This date typically precedes the record date by one to two business days.
• REITs (Real Estate Investment Trusts)
  Under Philippine law, REITs must distribute at least 90% of their distributable income each year. This makes them a cornerstone for dividend-focused portfolios.
• Preferred Shares
  Unlike common shares, preferred shares often come with fixed dividend rates, paid quarterly. These appeal to conservative, income-focused investors but usually lack voting rights.

• Stability & Cash Flow
  For many local investors—especially retirees or those with passive income goals—dividends offer a predictable cash stream in a market often dominated by speculative plays.
• Portfolio Cushion
  During market downturns, dividends can soften the blow of falling prices. For example, in a sideways market like 2023, dividend yields often outpaced capital gains.
• REIT Adoption
  Since 2020, the growth of REIT listings has pushed dividend investing into the mainstream, with investors increasingly comparing annualized REIT returns to time deposits or bonds.

Which Philippine Stocks Pay the Highest Dividends?

Not all high yields are equal. Some companies offer sustainable, consistent payouts, while others show temporarily inflated yields due to falling stock prices or one-time payouts.

These are selected for their combination of high dividend yields and quality traits. Inclusions cover PSEi constituents, Dividend Yield Index members, MidCap Index names, REITs, large-cap stocks, and others with strong volume, solid liquidity, or generally recognized market quality.

Dividend activity varies across major stock groups in the Philippine market. Below is a summary of how different index groups typically behave in terms of dividend practices and investor relevance:

• PSEi (Top 30 Blue Chips) - All constituents pay dividends, though yields tend to be lower due to premium pricing. These stocks are generally large, stable, and attract institutional interest.
• MidCap Index - Offers a mix of moderate growth and dividend income. This segment includes many undervalued names with steady payouts.
• Dividend Yield Index (DivY Index) - Composed specifically of the highest-yielding stocks in the PSE. Designed for income-focused investing, members here represent top dividend yielders.
• REIT Sector - Known for consistent, high-frequency payouts. All listed REITs are legally required to distribute a significant portion of their income, making them a favored choice for cash flow-oriented investors.

In the local market, dividends serve both as income and as a measure of how well companies handle capital and investor returns.

• Judge earnings reliability
• Build passive income portfolios
• Assess REIT and preferred share performance
• Hedge during bear markets

Dividends offer a clear, reliable way to earn from stocks in the PSE beyond just price movements.