Filipinos planning to invest in stocks are advised to be mindful of the performance of the companies that they plan to invest in to ensure the sustainability of the passive income they can generate from stocks.
Vanessa Galvez, Head of Product Development and OFW Desk at First Metro Securities Brokerage Corporation, outlined several tips for OFWs who want to earn passive income by investing in dividend-paying stocks:
Do look for companies that give out consistent dividends. Investors can either check www.edge.pse.com.ph and click ‘Dividends’ to see which among the listed companies provide consistent dividends every year.
They can also check dividends through their FirstMetroSec account. Log in, then go to ‘Research>Dividend History’ to check the consistency of dividend payouts through the years.
Do check for the dividend yield. Dividend yield is the amount of money you get back for every Peso you invest in a particular stock, usually presented in percentages. This is one of the best ways to measure profitability of your investments.
FirstMetroSec account holders can skip the math as their online trading platform automatically computes the dividend yield to help them track the growth of their investments.
Mind the dates. When it comes to dividends, investors should always be mindful of the dates. To receive dividends, stocks must be bought before the ‘Ex-date’. Additionally, dividends will only be credited to their accounts during the ‘Date Payable’ — both of which are accessible at their FirstMetroSec account.
Reinvest for compounding. It’s highly encouraged to reinvest the dividends you have earned from stocks to compound your earnings. Instead of withdrawing, maximize your gains by buying additional stock shares out of it.
“Ang pera mo, kapag ni-ro-rollover mo, lumalaki yung interest. Pag nagstart ka ng year one, maliit lang. Kapag ni-roll over mo yung interest, lalaki at lalaki siya over time,” explained Galvez.
Your income is not dependent on the stock price. Galvez explains that companies continue to provide dividends to shareholders despite of price fluctuations: “Kahit mababa ang stock price, continuous na dumating ang dividend sa kanyang mga shareholders. That’s the beauty of dividends. No matter what the stock price is, continuous lang na dumadating. Kaya nga siya tinawag na passive income.”
Invest in preferred stocks of stable companies. Dividends from preferred stocks are not dependent on the company’s earnings. Instead, it has a fixed rate and payout per year. This is less risky than ordinary stocks.
The “Investing for Passive Income” webinar aims to help OFWs learn about passive earning through dividends and to distinguish facts from myths about earning passive income through investing.
First Metro Securities is also currently providing assistance for OFWs who wish to open their brokerage accounts. Filipinos interested to begin their investments can email Galvez and her team at: [email protected] or at [email protected]
First Metro Securities can also engage with OFWs through Facebook, Twitter and Instagram: @FirstMetroSec