Dividend Yield Is Useful — But Not Enough to Decide

Disclaimer: Wala akong personal na issue sa Philstocks as a company. This is not an attack on Philstocks or any brokerage platform. This is only an educational reminder for newbie investors na ang dividend-focused posts can be useful, pero kailangan ng proper context.

This kind of post can be useful as a dividend data reference, pero hindi ito sapat para maging guide ng newbie investor kung bibili ba siya ng stock or hindi.

For newbies, madaling isipin na:

Higher dividend yield = better stock

Pero hindi laging ganun.

A high dividend yield can happen because the stock price has fallen. Kapag bumagsak ang presyo pero pareho pa rin ang dividend, tataas ang yield. Mukha siyang attractive, pero kailangan pa ring alamin kung bakit bumaba ang presyo.

Also, dividend yield is usually based on past dividends. Hindi nito sinasabi kung kaya pa bang ibigay ng company ang same dividend in the future. Puwedeng one-time special dividend lang. Puwedeng bumaba ang earnings. Puwedeng hindi sustainable.

A newbie investor still needs to ask:

Kumikita ba ang company nang consistent?

Manageable ba ang utang?

Sustainable ba ang dividend payout?

May growth pa ba ang business?

May competitive advantage ba?

Undervalued ba, fairly valued, or mahal na?

Kung dividend yield lang ang titingnan mo, para kang bumili ng prutas sa palengke dahil malaki at mukhang mura, pero hindi mo chine-check kung fresh pa ba sa loob.

Another issue is that it may unintentionally make investors focus too much on cash flow now. Pero kung bata ka pa at nagbu-build ka pa lang ng retirement fund, capital growth may be more important than immediate dividend income.

The better question is not just:

“Magkano ang dividend yield?”

The better question is:

“Makakatulong ba itong stock na palakihin ang pera ko over the long term?”

Kailangan ding tingnan ang total return. A stock may give 10% dividend yield, pero kung bumagsak naman ang stock price by 20%, lugi ka pa rin overall. On the other hand, a stock with low dividend yield but strong business growth can give better long-term returns.

Most importantly, dapat aligned ito sa goal ng investor. Iba ang kailangan ng retiree na gusto ng regular cash flow. Iba rin ang kailangan ng 25, 30, or 40 years old na nagtatayo pa lang ng retirement fund.

So again, dividend yield is just one data point. Hindi ito dapat gawing sole basis ng investment decision.

Before buying any stock, study the business quality, sustainability of dividends, valuation, risks, and whether the stock fits your financial goal.

Sa investing, hindi lang cash flow ang tinitingnan.

Dapat kasama ang total return, fundamentals, risk, valuation, at goal alignment.