Case study: TEL Dividends – Part 1

PART 1. Easy

PLDT – PHILIPPINE LONG DISTANCE TELEPHONE COMPANY (Stock code: TEL)

This video is posted with permission from Sir Aya Laraya of Citiseconline and host of Pesos & sense.

Source: Pesos & sense <-pls click to see their youtube channel (highly recommended for newbies in investing)

Finance Asia Magazine cited PLDT’s investor relations as the best in the country and also recognized PLDT as the company that is most committed to a strong dividend policy in the Philippines.

Refer to 1:30 – You earn in 2 Ways

  1. Dividends
  2. Selling your shares at a higher value


Focus  muna tayo sa dividends: Let’s assume na nabili mo shares mo at  2,500 pesos per share noong 2011

If you have 3M Pesos, magkaka 1,200 shares ka.

Last 2011, eto mga dividends nila:

  • March – Regular – 76/share
  • March – Special – 65/share
  • August – Regular 78/share

Total  Dividend for 2011 = 219/sh

  • Meaning, kung may hawak kang TEL shares sa 2011, meron kang dividend na P219 kada share mo.
  • E meron kang 1200 shares, sana nakareceive kang 262,800 pesos sa 2011. (219 x 1200sh)
  • Kung iaaverage monthly, may 21,900/month kang kita sa dividends pa lang.

You earned 262,800 or 8.76% of your 3M from dividends alone. Better than time deposit!

  • NOTE: TEL doesn’t give dividends on a monthly basis, they declare dividends on semi-annual basis. The 21,900/month computed above is just the “monthly average” of the 2011 dividend. Check dividend history.

2012 – If, let’s say sa 2012 nagdeclare ng dividends ang TEL ng 80,70,80 or total of P230. Times mo lang sa shares mo na 1200, may kita ka ng 276,000. or 9.2% of your original capital

After few more years

Pag umabot ng 300 ang dividends per year ng TEL, may kita ka ng 360k or 12%.

TEL’s Dividend Policy

“Our current dividend policy is to pay out 70% of our core earnings per common share. Further, in the event no investment opportunities arise, we may consider the option of returning additional cash to our shareholders in the form of special dividends or share buybacks. Philippine corporate regulations prescribe, however, that we can only pay out dividends or make capital distribution up to the amount of our unrestricted retained earnings.” – TEL

– Page 273/282 of their 2010 Annual Report

Dividend history

Source: Firstmetrosec | Sorry, the 2011 is not updated. There should be another 76/sh dividend there.

Price – 10 Year Chart of TEL

Imagine? Pano kung nakabili ka ng 2,000/sh last 2009 or 2011. Kung may 3M ka, may 1,500 shares ka sana.

  • 1500sh x 219/sh cash dividends = 328,500 Pesos
  • 328.5k/3M = 10.95% earnings from dividends

As of Feb 2,2012, price of TEL is 2,728.

  • Sabi sa video, you earn in 2 ways
  1. Dividend – 328,500
  2. Selling your shares at a higher value
  • From your original cost of 3M, your investment is now worth 4.092M.  Gain of 1,092,000

Pano kung nakabili ka pa noong 2005 at 1500/sh. sa 2011 nakareceive ka ng 219/sh na cash dividend. Edi ba ang laki na?

  • TEL has the highest dividend yield among regularly traded stocks. Dividend Yield = Cash div/Stock price
  • TEL is the biggest company in Philippines, in terms of market value.
  • TEL has the biggest weight among index stocks
  • TEL is also listed in NYSE as PHI.
  • TEL has cornered almost 70% market share after acquiring its rival DGTL/SUN.

What is the risk involved?

1.Dividends are not guaranteed.

Depende ito sa kinita ng kumpanya. Kung may sobra pang pera, pwede pa nila idistribute as special dividends. Check nyo sa taas ang dividend policy at dividend history nila.

2. Stock price can go up or down.

Check your risk appetite if you can handle the volatility. 

Kung sa kamalas-malasan mo e nakabili ka sa highest at 3,285 on Year 2007, at current price of 2728, your 3M is now worth only 2.491M.

Pero dahil may dividends from 2007, kahit nalulugi ka e meron ka naman natatanggap pa rin sa kanila. Sa dividends pa lang kita ka na.

May recession noong 2008, kahit real properties, bumaba ang valuation. Halos lahat ng stocks apektado. Pero kung titignan ang chart, isipin mo na lang kita mo kung mas maaga ka nakabili, mga less than 1,500. Yung iba nagsamantala, bili ng bili ng shares sa mababang halaga, habang nagpapanic ang iba at benta ng benta.Kung nakabili sila sa 2000/sh, mas malaki na value ng shares nila at 2728.

Why you shouldn’t panic? you can apply peso cost averaging.

Why long-term? Watch this Pesos & sense

Pano kung after 5 years, nasa 5k na rin ang price ng TEL? Doble na halaga ng ininvest mo,may dividends ka pa.

Btw, next month na bigayan ulit ng dividends ng TEL🙂

 

*This case study is for risk-averse investor and “capital preservation” is their focus.

 

I would like to thank Sir Aya Laraya for reviewing this post.

Please support his show on GMA7. They will be offering DVDs of Pesos & Sense Season 1. This can be a good gift to your loved-ones. You can also check their youtube channel & watch their complete episodes there for free. We’re looking forward to their season 2.

_________________________

Bakit ka naman magpapatayo ng apartment worth 3M tapos 20k lang kita mo per month, how about your tax? your maintenance? pagod mo pa. Kunsumisyon mo pa sa tenants mo. Di mo na rin maeencash ang pinagpagawa mo ng apartment. In case of emergency, madali makabenta ng stocks. Pero sa apartment/lot, hahanap ka pa ng buyer.

Caveat! Kanya2 Risk Appetite.

Part 2. TEL Divs vs condo/house&lot (advanced)

This will be a detailed study kasi pinag-iisipan ko pa kung pano magpagawa ng bahay out of TEL dividends.  Actually, para sa akin lang to pero pwede ko ishare sa mga interesado. Sana matapos ko hanggang mid-Feb. 

18 thoughts on “Case study: TEL Dividends – Part 1

  1. idol talaga.. ang galing🙂
    can`t wait for part 2….exicted na ako,
    ms masarap talaga maging may ari ng TEL kesa maging mangagawa nito hehehehehe

      • do you mean that i wait for the share to go below 2700k before i start cost averaging? did i read it right? thanks so much.

      • Hi winnie, di ko napansin hanggang wednesday ka na lang pala pwede bumili ng TEL para makareceive ng dividends. Parang di na ata bababa sa 2700 kasi 2 days na lang. Since you are in for long term naman, you can now buy at any price🙂 the lower the better😉

  2. hi,sir siomai.inde pa ako nakakabili ng TEL.hehehe.nakita ko ngayon 2,400 something.bababa pa kaya to next week? since nagbagsakan ang stocks sa US.thanks ha.

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