Dividend

I got an email from COL Financial regarding my cash dividend from Metro Pacific Investments Corp.(MPI) a few days ago. This is not my first time to receive such a notice but whenever I get to receive one, my excitement and joy seems like it is the first time. Who would not be happy to receive cash (or an equivalent) anyway? 😉

When a portion of the profit of a company is paid out to shareholders, the payment is known as a dividend. It may come in a form of cash, stocks or rights. I had a chance to receive all of them last year during my first year as an investor. And from that I will give you a bit of information. Pardon me for my non-adeptness in investing terms, remember that I’ve been exploring this avenue for just a year, so don’t expect to learn much, I’m a neophyte. All I wanted to share is the bliss I’m getting out of this so-called dividend and somehow I get to encourage you into investing also.

The first kind is cash dividend. This is in a form of currency credited to your account automatically; you will just see the amount in your account balance increases just like a bonus in your pay slip – eye-popping and smile inducing. What to do with the extra cash is for you to decide. Whether you want to withdraw it and buy yourself a nice shirt or use it to buy more stocks of the generous company that gave you a part of its profit. It is totally up to you. But I strongly suggest you do the second one.  It is the second secret to stock market wealth (according to TrulyRichClub). By the way, you will be taxed for this, 10%. 😉

The second kind is the stock dividend. Last year I received stock dividends from SM Prime Holdings (SMPH). It is a percentage of the entitled stocks* that you own. Let’s say they will give 25% stock dividends, and you own 100 entitled stocks then you will get 25 additional shares for free. That easy. You will see it added in your portfolio. Before, I used to think that this is a very boring kind of dividend… you get the same thing as what you already have… but as I have given the matter much thought, I begin to yearn for this more than the first kind. Because you get to invest it right away, and as the stock value increases your dividend increases as well, and there’s no tax.

The third kind of dividend is the rights. BDO Unibank Inc. (BDO) gave this last year. It is like a privilege given to stockholders to buy a certain amount of stocks proportional to the entitled stocks that they hold in a specified low price. As in much lower than the existing market value. For a given period of time, you can decide whether you will go for it or not. Should you decide to take the offer, you just have to fund your account before the deadline and the offer will be awarded to you. Just like that. I personally like this much because I get a huge discount and high stock price appreciation right away, plus a perfect timing to top-up your investment. Also, there are no extra charges like commission and taxes.

NOTE: In the process of trying to present accuracy to my post, I checked COLFinacial’s website and validate through the dividends record of each company in my portfolio. Among the types of dividends there’s another kind which I have not encounter yet and did not discuss here, it is called splits. I do not have any idea about that kind of dividend but I promise to update this as soon as I’ve stumble upon it.

*Entitled stocks – shares of a particular company that you have in your portfolio before the cut-off date (Ex-date).

For a quick summary please refer to the table below:

Whichever is given, I always accept it with a so much joy and consider it as a precious gift. 😉