Dividend: a share of profit paid to members or owners

In Filipino, a plain way to say it is bahagi sa kita: a share of the earnings. A dividend is decided after the earnings are known, so nobody can tell you next year’s in advance.

How it works in the Philippines

You meet dividends in three places, and each works a little differently.

Pag-IBIG MP2 savings

• Where it comes from. Pag-IBIG’s MP2 page says at least 70% of the Fund’s net income goes to dividends.
• Set once a year. The rate is announced after the year ends. The latest is 7.12% for 2025, shown on the MP2 page (checked 20 October 2026). Pag-IBIG’s MP2 page now calls these “return rates”, and Circular No. 487 calls the MP2 rate a “flexible return rate”. They mean the same yearly dividend.
• Paid out or added on. When you open an MP2 account you choose to have the dividend paid out every year or compounded, and Circular No. 487 makes that choice final for the five-year term.
• No tax. RA 9679 Sec. 19 exempts Pag-IBIG’s benefit payments from all kinds of taxes, so you keep the whole MP2 dividend.

Shares in listed companies

A company may pay a dividend from its profits, in cash or in new shares (a stock dividend), and announces the amount and the dates. For a Filipino citizen or a resident foreigner, the tax code takes a final tax of 10% on cash and property dividends from a Philippine company (NIRC Sec. 24(B)(2), as amended by RA 12214). The company withholds it before paying you (NIRC Sec. 57(A)), which is why it is called a final withholding tax.

Participating life insurance policies

Some life policies are “participating”: they share in the insurer’s surplus. Insurance Code Sec. 233(e) says such a policy must provide that the company will periodically work out and share any divisible surplus, under conditions the policy sets. These policy dividends depend on the insurer’s results and are not promised. Sec. 371 bars anyone from giving a “misleading estimate of the dividends” on a policy.

Worked example

MP2. A rate is only known after its year ends, so the useful sum is a past one. At the rate Pag-IBIG declared for 2025, 7.12% (Pag-IBIG MP2 page), PHP 100,000 kept in MP2 from January to December 2025 would have earned:

Savings kept all year

PHP 100,000

Dividend for 2025, at 7.12%

about PHP 7,120

Tax

PHP 0

That is our simplified calculation: Pag-IBIG works the dividend out on your balances during the year, and it has not published its exact method on an official page. Past rates do not predict future ones. The MP2 calculator shows the method and runs on the rate you enter.

Shares. This is a made-up company and a made-up dividend, for illustration only. You own 2,000 shares and the board declares a cash dividend of PHP 0.50 a share.

PHP 0.50 x 2,000 shares

PHP 1,000

Final tax at 10%

- PHP 100

Paid to you

PHP 900

Where you meet it

• Your MP2 account in Virtual Pag-IBIG, or the MP2 statement, which shows the dividend credited each year.
• A dividend notice in your stock broker’s app, with the amount per share and the dates.
• The yearly statement of a participating life policy.

Common mistake

The common mistake is treating last year’s MP2 rate as a promise for next year. The rate depends on what the Fund earned, and it is only known after the year ends.

Another is picking an MP2 payout option without knowing the difference. A compounded dividend is added to your savings and earns its own dividend the next year, the idea behind compound interest. A yearly payout gives you the money each year, and your savings stay the same size.

The MP2 dividend rates guide lists every official rate since 2021. See the dividend stocks guide for how company dividends are paid.