Dividends & Dividend Yield

1. What is a dividend?

When a company earns profit, it can keep some of that profit to grow the business — and it can hand some of it back to the people who own its shares. That handed-back slice is called a dividend. It is usually paid per share, often every quarter or every year, in cash.

Think of it as a share of the farm's harvest. You own part of the farm; in good seasons the farm may pay you part of what it grew. In a weak season — or when the farm wants to buy new equipment — the payment can shrink or stop.

2. The one formula: dividend yield

Yield answers a simple question: “If I buy this share at today’s price, how much cash did this company pay per ₱100 I put in, over the past year?”

dividend yield = annual dividend per share ÷ share price × 100

Example: a share costs ₱1,000 and the company paid ₱50 per share over the last year.

yield = 50 ÷ 1,000 × 100 = 5% — that is ₱50 of cash for every ₱1,000 invested, at that price, for that year.

Try the same math yourself in the dividend yield calculator on the home page.

3. Reading yield honestly

Three things a yield number does not tell you:

• It looks backward. Yield uses what the company already paid. Dividends are decided again and again — the board can raise them, keep them, cut them, or stop them.
• It moves with price, not just dividends. If a share price falls while the dividend stays the same, the yield rises. A very high yield can be a warning sign (a falling price), not a bargain.
• It ignores everything else. Total return is cash paid plus what the share price does — and prices move. A 5% yield means nothing by itself; context does.

Rule of thumb we will keep using everywhere on this site: a number is a question to understand, never an answer to act on.

4. What dividend-paying shares are (and are not)

Companies that pay steady dividends are often mature businesses. Growth companies often pay nothing and reinvest instead — neither is “better” by default. And no share is a savings account: the price you bought at can go down, dividends can be cut, and you can lose money. Anything that promises fixed high returns with no risk is not investing vocabulary — it is marketing, or worse.