Philippine Stock Exchange


Sunday, October 24, 2010


       So sorry guys it took me some time before I was able to post my next article which is about DIVIDENDS. It was because I am very much occupied in my work and too much worried about my family during the time that super typhoon Juan (international name Megi) hit the northern part of the Philippines last week. As of now you might probably know what was the effect of the wrath of that typhoon. Many of our countrymen are still in need of help as of this posting so if you can, please donate in cash or in kind to GK or any other organizations that are capable of giving the donations to the affected areas.
       DIVIDENDS... No, it's not the dividend in  the arithmetic operation, division. This is about dividends in the stock market. I have asked this question to my friends in the KFAM forum, "are they (companies) giving dividends yearly?" to which Bro Louis replied, "dividend is a sharing of the company's earnings during the period's performance. It might be yearly or only when the Board of Directors of the company decides. Some company are very generous that they give dividends twice or even thrice a year depending on the performance of the company". He further stated that there were two types of dividend being given; cash dividend and stock dividend (during this time we were talking about stock market). Thanks Bro Louis! Then Bro John316 also added, "as for cash dividends, it is being distributed to share holders even with negative earnings for the year provided there is a sufficient cash available in the company's balance sheet. Dividends are given to encourage shareholders to invest more & the public to know that a company is not keeping the earnings. Dividends also improve the share value of the listed company as investors are buoyed by the attractiveness of the company's dividends". Thanks Bro John316!
       Taking more of its meaning from wikipedia, "dividends are payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders. When a corporation earns a profit or surplus, that money can be put to two uses; it can either be re-invested in the business (called retained earnings), or it can be paid to the shareholders as a dividend".
       In my four months in the stock market, I have only encountered these two types of dividends; cash dividends and stock dividends. Cash dividends are, well, dividends that I have received in cash during the payment period. It was automatically debited into my online broker account. It will be like this, if for example I have 100 shares in XYZ company and they are giving a P0.50/share dividend. Then I will be receiving P50 from my 100 shares during the payment date. While for the stock dividends (I haven't received any stock dividends to date as I sold my PNX which I should have had my first stock dividend), the shareholder will be receiving dividends in the form of additional stock shares of the company. An example would be, if my favorite company XYZ declared a 30% stock dividend and I have a 100 shares of XYZ company, I will be receiving an additional 30 shares during the payment date.
       During my first four months of investing in the stock market, I was able to receive cash dividends already from BPI, PX, MPI and PNX. They were not that big because I only started small in capital but I was able to reinvest them thus letting them earn more profit also for me... But not all listed companies are giving dividends!
       Are you still afraid to try investing in stocks? Are you afraid of taking risk? Any doubts or questions are welcome here, please post them as comments...

"He who has a bountiful eye will be blessed..." < romer is aikonic, aikonic is romer >

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