Blue chip stocks are so called best companies in the Philippine market today. They have been selected by the Philippine Stock Exchange to represent the best companies in the country. They are the stocks that represent the Philippine Stock Exchange Index or PSEI.

If you want to know what we think are the current list of Blue chips stocks in the Philippines worth looking at and investing today’s market conditions you can check our Blue chips Stock Picks today.

Blue chip stocks are being reviewed every year from July of the previous year to the month of June of current year. The final list of the 30 stocks are announced normally during August period

These stocks are normally giving good dividends as these companies have a good recurring income. These are big companies and easy to identify in the public as these are brands most notable to many. For example Jollibee foods corporation, Banco De Oro, San Miguel Corporation and the like.

To be able to be considered as a blue chip or the cream of the crop of the stocks, it must meet at least 3 minimum requirements duly reviewed by the Philippine Stock exchange.

1. Liquidity

• The company should be among the most traded companies. This criteria selects the Top25% in median traded value in 9 out of 12 months

You can see below the traded value (amount in pesos) for the day of Blue chip stocks Emperador (ticker symbol EMP)

An advantage of this is that you can get in and out of the stock anytime because a lot of investors and traders are buying and selling the stock any time of the trading hours

2. Highest in market Capitalization

• The company should be the biggest in market capitalizations

This is to ensure that the company is strong enough to whether the economic situations that might occur, like the pandemic that we are having now.

You can see here that Emperador has a Market capitalization of 220Billion pesos. It’s a very big company.

Market capitalization can also be computed by the current price of the stock multiplied by the total Market shares available for that stock.

3. Market Float level is >12%

• The company should have the shares invested in public be greater than 12%.

For the company to be remain in the stock market it should have at least 10% free float level of the equivalent shares that the public can invest in the total amount of capitalization of the market

You can see here that Emperador has a free float level of 15.73%. Once this value becomes lower than 10% the Philippine stock exchange will not allow public to invest on the company so make sure the one you are buying have greater than 10% public float.

Blue chip stocks are very important index category of the stock market. If majority of these stocks are going down in direction, it means that the economic condition of the country may not be good and those can give a signal that it is not the correct time to invest in the market. The opposite therefore is true that if these stocks are going up in direction, it’s the best time to buy and ride the trend.

Watch our sample video on the Selection process for a blue chip stock

Earnings from the stock market through cash dividends is one of the two ways of earning passive income. We already have discussed how to earn from price appreciation in the market, if you have not read it yet refer to our previous article how to make money in stocks by price appreciation.

The photo below is an example of a cash dividend I received from a company called Semirara Mining Corporation (Stock code SCC). My brokerage company for this is COL financial and it gives me an update when I have earned a dividend from a company that I have put an investment with. Before we discuss the basic details of what is a cash dividend, lets discuss first what do we mean when we earn from a cash dividend from a company listed in the stock market

What are Dividends

Dividends are incentives being given by a company to stock holders of the shares of a certain company.

Before a company can give dividends to share holders it goes through approval process by its board director members. Deliberations are being conducted if the company has the capability to give cash (cash dividends ). This depends on the earnings of the company. It can only give dividends when they have spare cash.

So in technical terms, this is how the company distribute the earnings to existing shareholders. This is also a way for them to give appreciation for those who are supporting or giving investments to the company. People who buy the shares will be motivated to hold on the shares instead of cashing out as there is an incentive to it.

Companies distribute dividends every quarter, but for the Philippine settings this is not a hard rule, others can give twice a year or once a year as it depends on the market condition and company financial situation.

Two Types of Dividends

Dividends are classified in two types, cash dividends or stock dividends.

Cash Dividends

Cash Dividends is a type of dividends wherein the company gives cash on a specified date. We can receive this dividend electronically in our broker accounts during the payment period. The picture I have shown below is an example.

For the case below, company is giving 1.0 peso/share. Since I bought 6,000 shares form SCC (Semirara Mining Company,) I will be entitled to 1.0 x 6,000 shares or Php 6,000 pesos. There is a 10% withholding tax so there is a deduction of 600 pesos. Total amount that went to my account is Net amount 5,400 pesos. Nice!

Stock Dividends

Stock Dividends are type of dividends being given in the same manner as cash dividends but instead of giving out money the company will give a number of shares coming from the stock reserves of the company. Usually this is in terms of percentage of your existing number of shares. For example, a company declares a 10% stock dividends, you will then receive 10% of the number of shares that you have during the payment date. If you have 1000 shares then you will be entitled to 100 shares.

Note also that for this 2 types it applies to the common dividends being given regularly by the company. Sometimes when the company wants to give more dividends, they call this as special dividends. Its basically the same, just another incentive for you.

Important Dates and Considerations on Dividends

In order to receive Cash dividends (or stock Dividends), there are important dates and considerations you should take note. Simply buying a stock may not entitle you to the dividends.

There are several dates normally announce when a dividends is going to be given, these are;

               Ex-date

               Record date

               Payment date

Ex-date refers to the date when you should be holding the stocks to be included on dividend payouts. Take note this is the most important date. You should be holding shares of the stocks before this date and hold into it until this date. Once Ex date is arrived, if you buy shares on this date and after this date, you will no longer be entitled for the cash (or stock) dividends. This is where most new investors missed out so you better remember this.

Record Date

Record date is the date used by companies to account or register those who will be entitled. This is for the company purpose of recording so we should not worry about this date. Normally in disclosures, record and payment date is mentioned, so just count 3 working days before the record date and that will be your ex-date

Payment Date

Payment date is the date when the companies are obliged to pay us out with the dividends. Email will be receive from our brokers when they received the dividends from the companies. Reminder also that sometimes because of some technical or documentation issues there are times that payment date is deferred. If you did not receive dividends on the payment date, be sure to contact your broker firm for updates.

Dates for each stock can be located on PSE Edge disclosures, the attach link can be accessed.

Considerations

Remember that when a company give its investing shareholders cash or stock dividends, this will come from the company earnings or shares so there is an impact to the stock price. They inversely correlated so when a company gives out a 10% dividends, expect the price to correct by the same amount. Don’t worry on this as the market is just pricing in the effect on income or handing out of company earnings. Price will recover if the stock has great expectations in the future.

Watch our video lecture

Before reading this article I hope that you have understand what is a stock market already Base from our discussion on the previous article. You can visit it back to check so that you can appreciate the information from this topic. You can click the underlined link.

There are two ways of earning from the stock market. One is by price appreciation and another is by dividends. For this discussion we will only be considering the former (price appreciation) so we can understand how it works.

“Price appreciation refers to increase in share price of a stock”

In Philippine stock market setting, we can only earn from the market if the price of the stock that we have bought have gone up from its initial price.

For example, if I buy now from the stock shares of Jollibee Corporation at P204/share and tomorrow the price increased or appreciated to P214/share you will earn, if later your will sell already at this price. So the price difference per share of 10 pesos will have an impact of 10/204 or 4.9%. You will earn 4.9% from this transaction. Great right?

But think again.

Of course, there is a possibility of losing in the market as share prices move by the second, and it fluctuates in price in both ways. It can go up or down, so better choose wisely which stocks you are going to trade or invest in. Later I will explain also the difference between investing and trading in the market.

Now basing from our previous discussions on what the stock market is, we will continue explaining the effect of price appreciation. Remember this transaction last time when I bought the company shares for Global Ferronickel? This is the summary of my transactions when I bought 30,000 shares of the company. Later on when you have your brokerage account this transaction will be included on your transaction history.

So now that we have bought the shares these transactions will also have a data for the transaction #, Order# and everything else on what you see on the photo below. For this example, I have previously applied for my brokerage account with the company called COL Financial so all formats you will see will come from these brokerage firm. We will also have another discussion with the Brokerage firms that I know so you can see the difference. For now COL financial is the most popular brokerage firm in the Philippines

There are different companies listed on the stock market, so you can have as many as you want, later however try to learn how to diversify properly so you don’t get lost on tracking shares from the company that you buy. Too many stocks you buy will clutter on your portfolio.

Good thing our brokerage firm has a section on our account where we can see the summary of stocks that we buy. We call this our portfolio. For COL financial account holders this is how it looks like. I have shaded the sensitive details for personal reasons.

Notice the red rectangle I put on the %gain and gain area of my portfolio? There is a green colored value which signifies that my trade or investment have already earned a 3% increase after I bought the shares.

This happened because the actual price in the market of the shares I bought have as compared to the average of the price I bought it before (average of share price + broker commissions + tax deductions) is higher, so the market price of my stock have appreciated and earned 3% already!

Now you have a basic understanding how to earn from share price appreciation. Just a word of caution as always, if the market share price can go north, it can go south as well. So be careful always on what stocks you buy. Better study first the market before doing your trade or investment.

Oh by the way you know what happened to this stock? I kept it for another day and the price did move up more from the 3% gain I showed you. The price now appreciated more and so I decided to sell it already. Earning more than 10% in few days on the market is quite good so better take your profits or earnings from the market while it is still on the high prices.

I hope our discussions have shown you how to earn from price appreciation from the market. As you have learned here there is a potential of earning passively on the stock market. See you on our next topic.

Related Articles:

Blue Chip Stock Picks

How Do you Earn From the Stock Market by Price Appreciation

How to Earn from Dividend Stocks, List of PSE Stock Dividends for September 2022

Why We Need to Diversify Our Investments

Base on Philippine statistics, there is less than 1% only of Filipinos who know how to use the stock market as a source of passive income. Other countries like the United states or Malaysia (where I am currently working now) know what is the stock market ever since they were in high school levels. I got to know about it already when I was an OFW already. Too late maybe? But think again, there is no age requirement when can you start investing in the market.

In basic terms, a Stock Market is like a store, but instead of collaborating with the company (which could cost you Millions) you can be a part of the company by buying stock “shares” from the company that you like with a minimum capital amount that you can invest. This is the current office building where we can buy stock market “shares”.

This is legitimate transaction as the government regulates this. Our Philippine Stock Exchange tower is located in One Bonifacio High Street , 5^th Avenue corner 28^th Street Bonifacio Global Taguig Metro Manila Philippines. You can google map and see its location. Its been there since 1927.

As I just said it is a store of “shares”, these shares represents a financial asset of the company, albeit small portion of the company that has a minimum limit in “numbers” where the public can participate. This is not a physical object but these “shares” represents securities or bonds of a company.

For example, you should at least know who is Jollibee foods corporation, the one with a Bee mascot where you can buy your value meals. Jollibee is the most well know company that is listed on this Philippine Stock Exchange. As you know for a business to grow, a company needs to have large capital. It can earn from its Franchise business and later do its expansion on its own, but then again this will take some time

To speed up the process, it needs to borrow capital. It can take capital from the Banks but you know as well that Banks give too high interest rates right? If you loan for a house the banks takes in at least 6-8% per year. This is big and could take a chunk of Jollibee’s earnings which could prevent it from further expanding its business. So to borrow capital with low or no capital interest it can go to the “Market” and list a security bond with the Stok Exchange in the form of “Shares”. This Stock exchange is our Philippine Stock Market, the one with the address above as I mentioned, also known as PSE market or PSE.

For the company to be able to list or sell shares on the market it has to sell its bond with the PSE with at least 10% of the whole company’s worth. This is then divided into individual share counts or “shares” and can be bought by common people like us who want to take partner with the company at an specified price per share. Currently you can buy shares of the company at P204.0/share.

You can now become an Investor for Jollibee, a well known and fast growing company in the world.

So now instead of becoming a partner of Jollibee where you need Millions of pesos worth of investment capital, you can buy it now at a much cheaper price.  To be able to gather huge investment capital from the public, any individual now eligible to buy shares from the stock market can get to participate even if you only have a small capital to use. When selling of shares to the investing public is completed, Jollibee can get the capital it needs now for its business expansion. As you know now Jollibee have branches all over the world, in China, United States, Europe, Middle east.

The stock market transaction nowadays is done electronically so you can buy it through your bank account if ever it is accepted for transaction.  But you need to have connection to broker account.

But it is not done directly buy your banks. You need to get a brokerage account that is link to your bank so you can do the acceptable transaction.  You can buy shares or you can sell shares as well if you need to take your investment, if you need it or you have gain from your investment. Later we will discuss different brokerage accounts you can use and how to apply to open a brokerage account.

This was a sample of investment I bought through my brokerage account. An example here I bought shares of a Mining company known as Global Ferronickel. The quantity mentioned on the transaction is the number of Shares I bought. In your broker account you can buy it in different times or different amounts, for this case I bought 10,000 shares three times, so the total is 30,000 shares. The price beside it is the price per share.

You can see that the prices vary every transaction, for this case, first 10k shares are bought at 1.61, second 10k shares at 1.59 and third 10k shares at 1.63. Later on our discussions I will explained why I bought it this way, for now just take it as it is.

When buying these shares, there are other charges involve as this is a legitimate transaction so you need to pay for taxes, broker fees and other commissions. The net amount will then represent my total transaction for this activity.

So now you know what is the Stock Market is all about and how we can use this as a form of investment on the company that you like to have investments.

Investing is commonly heard when we talk about life progress. We always hear this from resource speakers, financial advisors and mentors.

For most Filipinos there are two ways of making money that is by working or by having a business. Most will surely agree that working is more sustainable to do because to start a business your need some capital and because of our certain obligations be it our house payments, growing children, providing for our parents.

We are also risk averse as business history in our country shows that only a handful become successful in the long run.

But if you are thinking about it carefully, having to work or getting a job will serve its purpose as long as we still can do it at the best of our abilities. I always come to think of it especially having to work for the last 10 years and as an OFW in Malaysia. I can still do it so my boss is still re-hiring me, but by the time I can’t bring results, as you know OFW’s are contract based, anytime they can cancel my contract and let me go. Even if we can sustain it long enough, a time will come that we have to let it go and retire without a source of income.

Later on, if we don’t work, how are we going to sustain our obligations? Who doesn’t want to live what we want to do later either your passions in life or travelling when it is allowed again? Then the concept of investing comes to our mind.

Investing is a pre-requisite to ensuring your future financial security. By investing you are not only adding savings for yourself but also you end up having another source of income. Passive income can come from different forms or sources and one of this that we focus on this site is from passive incomes sources like the stock market. In the stock market you can earn from price appreciation (when the price of the stock that you buy goes up) or through dividend payments from good companies

Investing is using your money to make more money as the say in layman’s term. We are working to make money so it is wise also to make money work for us.

And just like any other business however, as I always mentioned in my vlog’s on my youtube channel “Palaboy Trader” there is a risk in investing especially if you don’t know the nature of what you are going into. Investing in the market is very lucrative if you follow a certain discipline and you can avoid taking big risks or end up losing what you work hard for

Is Saving similar to Investing?

Savings is the result of having to take from a surplus of your income and it does not generate additional source of income rather it serves as our buffer for emergency use. It does not add value when you just keep your money at the bank (well with a small interest rate it does give a few percentage, but is not enough to be considered significant).

Here are the list of things or ideas I can identify why we need to start and keep on investing even if we are currently at Pandemic stage

1. Financial Freedom

This is the simplest reason why do we need to invest, that is to achieve financial freedom. To have financial freedom means having enough cash to sustain our families and ourselves.

As I mentioned, we have certain obligations we are trying to fulfill that is why we still cannot leave our work. Majority of us who are working have the dream of having our own house so we have monthly loans we need to pay. For others  who are preparing for our children college goals, tuition fees are always to be considered and as mentioned during our retirement we need to prepare that there will come a time that we will not be able to have full time jobs.

Since most of us have only one source of income, we should set our goal and learn ways on how to be able to manage these current obligations and on the other hand prepare for investment as keeping our savings on the banks with low interest rates would not be enough, the investment is therefore needed to create wealth as time goes by.

You need to take charge of these things and keep a clear perspective of what needs to be done to accomplished your life’s long goal of becoming financial independent.

This website purpose is to be able to guide those who are willing to take the opportunity being given by the market. As investing in stocks or for dividends involve very little capital only. To build your wealth correctly for your future requirements you need to study the market properly and work towards the same.

I have and am currently guiding people on the proper way of investing in the markets to minimize the risk, you can check my membership section if you are seeking for guidance.

2. Inflation

Due to the current pandemic situation, prices of goods are fluctuating very fast and your ability to buy these products goes in opposite direction as you can only buy now fewer worth of items when the price gets high. Such is the nature of inflation.

Here in the Philippines, our inflation is quite high and it grows annually up to 4-5%

This means our purchasing power is reduce by the same amount every year. You can tell this easily when you look at the prices of your favorite products when you are young as compared now

Basic savings account will not be able to beat inflation at the current fast pace of its increment. For most banks in the Philippines below is the current list of interest rates when you park your money in the bank, you can see it below, as you see there’s no bank currently giving 4-5% interest rates.

3. Increase your Wealth

There are different ways to increase your wealth. You can do this too while you are working. By being diligent to your work, you can get promotion which translate to increase in salary. This helps a lot to augment the inflation that we experience, but then again promotion only comes after few years of working hard and assuming the company notices your achievements.

Investing is one of the forms of increasing your wealth, since we know that working in companies and with our salary we can only provide for basic needs, so you need to save any excess from it and make it work for you.

Investing in the market does not need to have very large capital at the start, investing means taking small portions of savings and gradually accumulate shares on the market especially during this time when all of them are mostly at there lowest level.

Don’t worry if you do not know what to do if you are new to investing in the market especially in the Philippine context, I created this site for that purpose alone.

And as you know as well, those that are wealthiest are those that invest and do business but not those who are workers like us.