Amid economic slowdown, job cuts, top companies give out generous reward to owners

TOP companies raised by a fifth the cash reward for their owners last year amid an economic slowdown that has seen more firms slash jobs.

In a statement, the Philippine Stock Exchange (PSE) said cash dividends of publicly held firms grew 18.8 percent to P219.24 billion last year from P184.58 billion in 2007.

The PSE said this reflected an increase in the earnings that listed companies chose to distribute among their owners.

Out of 245 firms, 91 companies, representing 37 percent of all listed enterprises, declared cash payouts. The latest figure is an increase from 2007, when 35 percent or 84 out of 243 listed companies, declared cash dividends.

Overall, the cash dividends declared last year represented 39 percent of the combined profit of listed companies, higher than the 36-percent average indicative dividend payout ratio in 2007.

“The increase in dividends declared by listed companies is a welcome report for the market, particularly during these difficult times,” Francis Lim, PSE president, said.

“We have not stopped from advocating for higher dividend declarations from our listed companies, particularly through our corporate governance initiatives,” he said.

The average dividend yield for all listed companies also expanded two-fold to 5.42 percent last year, an increase of 132 percent from a 2.33-percent dividend return generated in 2007, and much higher than the 2.07-percent dividend yield generated by the stock market in 2006.

The dividend yield represents the indicative return from investing in stocks, assuming prices were unchanged.

The yield is calculated by dividing the total cash dividends declared by all listed firms by their total market capitalization at the end of a certain period and is expressed in percentage terms.

Dividend yields for companies comprising the PSEi, the benchmark index, more than doubled to 5.84 percent in 2008, an increase of 124 percent from 2.6 percent in 2007.

”By knowing the dividend yields of companies, investors can see that even if stock prices do not move, there are returns to be gained from investing in stocks through these dividends, the yields from which may even exceed those from fixed income instruments,” Lim said.

With respect to specific sectors, the financials sector, which consists of banks, remittance and reinsurance firms as well as the PSE—accounted for 51.3 percent of total dividend declarations at P112.47 billion, up 11 percent from P101.36 billion the previous year. The total amount of dividends declared included those of foreign-listed Manulife Financial Corp. and Sunlife Financial Corp.

The services sector, which is made up of telecommunications, TV, information technology-oriented as well as leisure and gaming firms, cornered 29.2 percent of total dividend announcements last year at P64.09 billion, higher by 37.1 percent from P46.74 billion in 2007.

Market heavyweights Philippine Long Distance Telephone Co. (PLDT) and Globe Telecom Inc. declared a total of P194 per share and P125 per share in dividends, respectively last year. Total cash dividends of P36.6 billion and P16.54-billion paid out by the two companies, respectively, represented the two biggest cash payouts last year.

The industrial sector, composed of food and beverage firms, utility and power generation companies, as well as manufacturing firms, paid P24.53 billion in dividends last year, up 33 percent from P18.33 billion in 2007. The industrial sector accounted for 11 percent of total dividend payouts for 2008.

Companies in the property sector declared P7.6 billion in total dividends last year from P6.84 billion the previous year.

Holding firms, small and medium enterprises and the mining and oil sectors, however saw their total dividend declarations dip last year. –Chino S. Leyco, Reporter, Manila Times