Dividend stocks in the Philippines, explained

Dividend stocks are shares in companies that pay part of their profits to shareholders as dividends. A company’s board declares each dividend, and a stock dividend also needs the approval of stockholders holding at least two-thirds of the outstanding capital stock (Revised Corporation Code, Sec. 42). Dividends are not fixed: a company can raise, cut or stop them, and the share price can fall at the same time.

How dividends are declared and paid

1. Declaration. The board declares a dividend (a stock dividend also needs the stockholders’ approval before it is issued) and announces the amount, the record date and the payment date on the exchange.
2. Ex-dividend date. The PSE sets the date from which the shares trade without the right to the declared dividend (PSE Consolidated Listing and Disclosure Rules). To receive the dividend, you must have bought the shares before this date.
3. Record date. The dividend goes to the shareholders on the company’s books on this date. The PSE asks companies to disclose the record date at least 10 trading days ahead (PSE Guidance Note 18).
4. Payment date. The dividend is paid, within 18 trading days of the record date under the same guidance.

Cash and stock dividends. A cash dividend is paid in money. A stock dividend is paid in new shares: you own more shares, but each is worth less, because the company’s value is spread over more shares. See dividend.

Dividend yield

Dividend yield is the yearly dividend per share divided by the share price. For example, a share priced at 100 that paid dividends of 5 in the last year has a yield of 5 in 100.

A very high yield can be a warning sign. Often the yield is high because the price has fallen, which can mean the market expects trouble and the dividend may be cut. A yield based on last year’s dividend says nothing certain about next year’s.

Tax on dividends

• Cash and property dividends from a Philippine company to a Filipino citizen or a resident individual are subject to a 10% final tax, withheld before you are paid (NIRC Sec. 24(B)(2) as amended by RA 12214).
• Stock dividends that transfer surplus to capital are not taxed when received (NIRC Sec. 73(B)).
• Selling shares on the exchange carries a stock transaction tax of one-tenth of 1% of the selling price, from 1 July 2025 (NIRC Sec. 127(A) as amended by RA 12214).

Foreign shareholders are taxed at different rates. This is general information; check your own case with the BIR or your broker.

Risks

• Dividends can be cut or stopped when profits fall.
• Share prices fall as well as rise, and a good dividend does not make up for a large fall in price.
• Too much in one company or one industry means one bad year hurts the whole of your income. Spreading money across several companies and industries lowers that risk.
• Costs. Broker fees and taxes reduce what you keep.

For property companies that must pay out most of their income, see REITs.

See passive income in the Philippines.

For all the ways to save and invest, see the investing guide.

This page explains how dividend stocks work. It does not recommend any company, and past dividends do not predict future ones.