Cash dividends declared by listed firms grew 18.8 percent to P219.24 billion last year from P184.58 billion a year ago reflecting an increase in the earnings that listed companies chose to share with investors, the Philippine Stock Exchange (PSE) said, citing data from its research group.
Out of 245 companies with listed common shares in 2008, a total of 91 firms declared cash payouts, representing 37 percent of all listed firms. This is an increase from 2007, where 35 percent or 84 companies, out of the total 243 listed companies, declared cash dividends.
Cash dividends are a portion of the corporation’s earnings or accumulated profits paid to stockholders.
Overall, the cash dividends declared in 2008 represented 39 percent of the net incomes of listed companies the previous year, a jump from 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. While it is true that we cannot force our companies to declare cash dividends, we have not stopped from advocating for higher dividend declarations from our listed companies, particularly through our corporate governance initiatives,” PSE president Francis Lim said.
The average dividend yield for all listed companies also expanded two-fold to 5.42 percent in 2008, 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.
The PSE itself declared a total of P20 per share in dividends the past year, generating a dividend yield of 7.41 percent. This represented 70 percent of the income of the company in 2007. It also surpassed the P8.80 per share cash payout declared in 2007 (with a return of 0.86 percent) and the P5.76 per share dividend announced in 2006 (with a yield of 2.06 percent). “We want to lead by example,” Lim said.
Also, dividend yields for companies comprising the PSEi 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 listed 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.–Daily Tribune
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