Skiddoo Philippines Inc

Dividends: Your Other Blessing in the Stock Market

When you invest in the stock market and become part of your chosen company’s continuing growth, you will earn mainly in two ways: through capital or price appreciation and through dividends.

Capital or price appreciation is an increase in the market price of your stock over time brought about by an increase in its potential value and the demand to buy its shares. The faster a company can grow, the faster its price can appreciate.

Profitable corporations can also issue dividends, whether in cash (cash dividend) or in additional shares of stock (stock/rights dividend) as a means for shareholders to share in their distributed profits.

Dividends are given by top companies whenever they earn significant profits from their business in a particular period. The owners of these companies can decide whether to keep all their earnings and re-invest it in their business (retained earnings), or give a portion of the earnings to its shareholder members in the form of dividends.

Again, if you buy shares of a certain company, then you are a shareholder. And you are entitled to receive dividends if the company you are invested in declares that they will distribute so on a particular date directly credited to your portfolio.

*Cash dividends will be credited to your portfolio cash balance/buying power/portfolio wallet.
**Stock dividends will be in the form of additional shares of that company you are holding.

Regular and Special Dividends

Usually, dividends are paid out on a regular basis. This could be on a quarterly, semi-annually, or a yearly basis.

Special dividends are those that are given not on a typical recurring time as the regular dividends. This happens when a certain company earns more than they expect in a particular period and they want to share a piece of that “extra” pie to their shareholders.

Rates of these dividends vary per year/period and per company.

The Dividend Dates

A lot of new investors are asking about these important dates that they usually encounter when their broker announces that a company will be giving out dividends to its shareholders.

The Board of Directors of companies must always approve any decision to pay dividends. A process is basically followed through these four common dates:

1) Declaration Date – This is the day that the Board of Directors announces their intention to pay dividends to shareholders. During this date, the ex-dividend date, record date, and payment date will also be announced. This is usually a month before the ex-dividend date.

2) Ex-Date or Ex-Dividend Date – This date is like the “boundary” to identify those entitled to receive dividends. If you buy the shares of a company on an announced Ex-dividend date, then you are no longer entitled to receive such dividends. You have to remember that in order to receive the dividends, you have to buy the share of that company at least one day before the ex-dividend date.


3) Record Date – Companies need some time to record and reconcile the list of shareholders who will receive the dividends. Usually, the record date is set at three days or more after the Ex-Date. You can actually sell your shares (position) between the Ex-date and the Record date and still be entitled to dividends from that company. But as a long-term investor, why would you sell soon? :)

4) Payment date – This is the date when investors owning such stocks celebrate because the dividends are actually paid to them. Shareholders may either redeem the cash dividends or use them to buy more shares.

Dividends To Watch Out For in the Coming Weeks!


Now, I hope you understood those dates by now and are ready to receive your extra blessings for deciding to invest in the stock market.

You can always visit the website of the Philippine Stock Exchange to check what companies are declaring dividends in the coming weeks and months by clicking on the Listings and Disclosures page and select Dividends/Rights tab.

How To Calculate Your Dividends

It’s pretty simple.

For example, Meralco (MER) has declared to give its shareholders who invested in them on Ex-Date March 21, 2013 cash dividends worth P6.10 per share to be paid on April 24, 2013.

Let us assume you already have 1,000 shares in your investment portfolio, your total dividends receivable by April 24, 2013 would be P6,100 (P6.10 x 1,000 shares). Of course, you need to deduct 10% withholding tax from P6,100 to have the final dividend amount of P5,490. Awesome!

Share your blessings. Pay forward what you have learned. Never get tired of learning new things. Hard work and smart work pay dividends. 😉

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Rock your way to abundance!


P.S. 1. Are you an OFW who’s been looking for a investment placement where your money could grow higher than your time deposit accounts? Are you outside of Metro Manila and would like to start investing in mutual funds but have no personal advisors to help you out? Click here so I can help you open a mutual fund account NOW! .

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P.S. 3. My co-author/illustrator Des Feliciano and I have just launched our “The Adventures of Pepot Kuripot and Dora Gastadora” comic book! It’s arguably the first and only personal finance-influenced comic book in the Philippines. Order your copy now from our website and have it delivered right at your doorstep. Or you can grab your copy yourself at The Pantry at 07 in Makati City and ilovemilktea in Las Pinas City. Now available also in Australia, Saudi Arabia, and the USA! Email for more details.

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P.S. 1.The OFW UsapangPiso Forum in partnership with Colayco Foundation for Education will be conducting a webinar featuring Mr. Armand Bengco who will talk about proper money management – spending, saving, planning & investing entitled Pisobilities: Wealth Within Your Reach” on April 19, 2013 at 6PM (Philippine time). Register here now! 

P.S. 2. For those who will not make it to the Money By The Book event of OFW UsapangPiso group, you may attend the Personal Finance for Every Juan seminar sponsored by The Global Filipino Investors Singapore. You may visit their Facebook event page for more details.

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Photo credits:
Principles of Accounting
The Financial Training Academy

23 thoughts on “Dividends: Your Other Blessing in the Stock Market”

  1. I’m believer in dividends. It’s a little under-appreciated, compared to all the attention price appreciation is getting.

    Right now I’m waiting on TEL and AP dividends 😀

  2. I’m waiting for MER too, but tell me Burn what’s the difference between the regular and the special dividend?

    1. Hi Bernie, I believe I already explained the difference between the two. But to re-clarify, regular dividends are paid at a specific time of the year, while special dividends are given only in certain times such as when a company achieves high profits. Extra bonus sa mga shareholders kumbaga.

  3. a large chunk of total return from stocks are from dividends,and dividends are a powerful tool for compounding your wealth by reinvesting them for the long term.dividends are a reliable income as long the company earns and grow their income.a 7% dividend yield from PLDT will double your capital invested in just 10yrs even if the share price remains constant.are you wondering why fund managers favorite stock is PLDT,because this company is a good dividend payer.this company is a money machine for as long as people uses internet,mobile phone lines and fixed line this company will always distributes dividends for the long term.

  4. Hi Sir. Pano po ung computation ng dividends sa MBT? Nakalagay kase Stock: 30% ung dividend and to be paid on September 16. Thanks po.

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