Recently updated on: February 5, 2024
The Philippine Stock Exchange launched two new thematic indices in our local bourse. The first is the MidCap Index, while the other is the PSE Dividend Yield Index (PSE DivY), which can help investors diversify in high-dividend stocks through dividend investing.
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What is the PSE Dividend Yield Index (PSE DivY)?
According to the PSE Fact Sheet, the Dividend Yield Index focuses on companies that consistently give high-yielding dividends through these methodologies:
- Listing History. The company must be listed for at least 12 months and at least six months for REITs.
- Free Float. Free float of at least 15% of its outstanding shares.
- Liquidity. Must be among the Top 25% of median daily trade per month in nine of the twelve months.
- Dividend. Common stocks must have regularly issued cash dividends for three consecutive years.
- Financial Criteria. It must be financially sound.
- Final Selection. Twenty companies with the largest three-year average dividend yields and have passed the free float and liquidity requirements.
- Weighting. At each rebalancing period, the highest weight in the index is 10%.
In summary, the Dividend Yield Index (DivY) comprises 20 high-dividend companies that consistently pay annual, bi-annual, or quarterly dividends, are highly liquid, and have a good payout in the last three years.
DivY companies are selected based on a stock's consistent high-dividend yield and not just a single dividend payout. This means that even if some companies can give a one-time 15% dividend yield, it doesn't mean they will be selected.
PSE DivY Composition
Here are the 20 companies that are currently included in the PSE Dividend Yield Index (PSE DivY):
| Security Name (Industry) | Ticker Symbol | TTM Dividends |
|---|---|---|
| 1. AREIT, Inc. (Property - REIT) | AREIT | 6.42% |
| 2. China Banking Corporation (Financials - Banks) *NEW* | CHIB | 6.01% |
| 3. Citicore Energy REIT Corp. (Property - REIT) | CREIT | 7.57% |
| 4. DMCI Holdings, Inc. (Holding Firm) | DMC | 14.41% |
| 5. D&L Industries, Inc. (Industrial) | DNL | 4.55% |
| 6. Figaro Coffee Group, Inc. (Industrial) | FCG | 4.22% |
| 7. Globe Telecom, Inc. (Telecommunications) | GLO | 5.81% |
| 8. International Container Terminal Services, Inc. (Services) | ICT | 4.02% |
| 9. LT Group, Inc. (Holding Firms) | LTG | 13.47% |
| 10. Metropolitan Bank & Trust Company (Financials - Banks) | MBT | 5.54% |
| 11. Manila Electric Company (Industrial - Power) | MER | 4.95% |
| 12. MREIT, Inc. (Property - REIT) | MREIT | 7.76% |
| 13. Nickel Asia Corporation (Mining) | NIKL | 4.69% |
| 14. RL Commercial REIT, Inc. (Property - REIT) | RCR | 7.79% |
| 15. Robinsons Retail Holdings, Inc. (Services - Retail) | RRHI | 4.97% |
| 16. Semirara Mining and Power Corporation (Industrial - Power) | SCC | 22.08% |
| 17. Security Bank Corporation (Financials - Banks) | SECB | 4.11% |
| 18. Synergy Grid & Development Phils., Inc. (Industrial - Power) *NEW* | SGP | 11.28% |
| 19. PLDT Inc. (Telecommunications) | TEL | 8.44% |
| 20. Universal Robina Corporation (Industrial) | URC | 2.98% |
Note: I used the details taken from the PSE Website and Investagrams.
Quick Facts About the Dividend Yield Index (DivY) Stocks
Here are some quick facts about the PSE Dividend Yield Index (DivY):
- The average dividend yield of the PSE Dividend Yield index is 7.45%.
- The industrial sector is represented most, followed by the Properties - REITs.
- The highest dividend yield among the 20 DivY stocks is 22.08% from Semirara Mining and Power Corporation.
- The lowest dividend yield among the 20 DivY stocks is 2.98% from Universal Robina Corporation.
- Four stocks ($DMC, $GMA7, $LTG, and $SCC) distributed a double-digit dividend yield in 2023.
DivY Rebalancing History:
- Feb 2023 - BPI, DDMPR, FILRT out; CREIT, UBP, SECB in.
- Feb 2024 - AEV & GMA out; CHIB & SGP in.
Advantages of Using Dividend Yield Index
1. Easy Checking of high-dividend stocks.
The Dividend Yield Index is a great way to narrow your watch list when looking for high dividend-paying stocks.
Depending on your investing strategy, you can identify stocks within your minimum dividend yield rate.
For instance, some investors only buy stocks that pay 8% per annum of dividends, which can sometimes be high. Meanwhile, some conservative investors settle for stocks that pay at least 5% annually.
2. Highly liquid dividend stocks.
Liquidity is one of the issues when investing in the Philippine Stock Market, which is a problem for high-net-worth individuals and fund managers because it would be difficult for them to sell their shares if needed.
However, if you're using the Dividend Yield Index, which has a liquidity and minimum free float requirement, you can ensure that you will have enough liquidity if you ever have to sell your shares.
3. Diversification Opportunity
The PSE DivY comprises companies from various industries and sectors, like holding firms, properties, telco, industrial, services, banks, power, and mining.
This means you can quickly diversify your portfolio from the 20 high-dividend yield companies.