PSE Dividend Yield Index (DivY) Stock Dividends

The PSE Dividend Yield Index, often shortened to DivY, is a benchmark for tracking the performance of top dividend-paying stocks in the Philippine Stock Exchange. This index is composed of 20 companies that don’t just pay dividends, they do so consistently and competitively, based on yield.

The selection isn’t random or based on popularity. The PSE uses a defined set of filters to choose which companies qualify. These include:

• Dividend track record - only stocks that have issued cash dividends for three straight years are considered.
• Public ownership - a company must have at least 15% of its shares available to public investors (free float).
• Trade activity - the stock needs to be liquid, meaning it should be among the top 25% in trading volume for most of the past year.
• Listing age - the company must be listed for at least a year (or at least 6 months for REITs with a declared dividend policy).
• Financial health - companies that meet all these criteria are still subject to internal financial checks to ensure they’re stable.

After these filters, the PSE ranks eligible stocks by average dividend yield over the past three years and selects the top 20.

Not all companies are created equal in size, some might have a massive market cap that could overshadow smaller players in the index. To prevent that, the PSE limits each company’s weight in the index to a maximum of 10% during each rebalancing cycle. This ensures the index stays diversified and isn’t skewed by a single stock’s movements.

The DivY Index isn’t static, it’s reviewed twice a year, every February and August. If a company no longer meets the rules, it can be removed and replaced by another that ranks higher based on the latest dividend performance.

The index itself is updated at the end of each trading day, incorporating real-time price movements and adjustments in shares, float, or capping.

The DivY Index isn’t a simple average, it’s calculated using free float-adjusted market capitalization, with each company’s weight adjusted by both public share availability and capping rules.

DivY Indext = [ ∑i=1n (Pit × Sit × Fit × Cit) / b ] × DivY Indext−1

Where:

• Pit = Last traded price
• Sit = Outstanding shares
• Fit = Free float factor
• Cit = Capping factor
• b = Base free float-adjusted market capitalization
• DivY Indext−1 = Previous index value
• n = Number of constituents (20)

In plain terms, the formula does the following:

• For each company i, multiply its: Pit (price) × Sit (shares) × Fit (free float) × Cit (capping).
• Add up all those results — this gives the total adjusted market cap.
• Divide that total by the base market cap b.
• Multiply the result by yesterday’s index value DivY Indext−1.

This updates the index to reflect today’s combined performance of all included stocks, while adjusting for tradability and weight limits.

Let’s say three stocks in the index have the following:

To compute each stock's contribution to the index, we multiply its price, shares, free float factor, and capping factor:

• A: 100 × 1,000,000 × 0.30 × 1.00 = 30,000,000
• B: 50 × 2,000,000 × 0.25 × 0.90 = 22,500,000
• C: 20 × 3,000,000 × 0.50 × 1.00 = 30,000,000

Adding them gives us the total free float-adjusted market capitalization for today:

Total adjusted market cap: 82,500,000

Now we plug this into the index formula. If the base market cap (b) is 100,000,000 and yesterday’s index was 1,200:

New Index = (82,500,000 / 100,000,000) × 1,200 = 990

This decline reflects how price drops or lower floats in key stocks can impact the overall index.