GMA 7 dividend review

GMA7 Network 2020 Dividend Review

stock code: GMA7

We are going to review the dividend trend and history of GMA7 as well as its stock performance in the last decade for 2020 and beyond! Also, let’s see how it fared against Pag-ibig MP2 program, one of the best investment vehicles available in the Philippines. 

GMA Network, Inc. is engaged in television and radio broadcasting, the production of programs for domestic and international audiences, and other related businesses. Incorporated on June 14, 1950, GMA was listed in the Philippine Stocks Exchange on Jul 30, 2007.

COL financial gave this stock a buy rating of below 5 pesos with a fair value of 6.10 pesos per share. It is currently trading at 5.31 pesos per share, above its buy rating but still below the fair value.

Fair value rating

Since the stock price is above Col’s buy level, should we stay away from this stock and wait for the price to go lower or near the desired levels? As seen on the chart below, GMA7 has been on a long decline since 2013 and trading below its IPO price of around 8.70. In technical analysis, this stock is in what we call a downtrend.

gma stock chart
Figure 1. GMA Annual Stock chart

Dividend trend

As per Col Financial, the company is regularly giving dividends since 2008, and the dividend rate is ranging from lows of 0.25 to highs of 0.73 per share. At a glance, Figure 2 looks too erratic and unpredictable. Jumping from low rates to high rates. But if we look at the last 5 years alone, we’ll that its still in an increasing rate which is good considering that the stocks price has been declining over the same time period.

GMA7 Dividend Rate
Figure 2. GMA7 Dividend Rate

The dividend rates shown above translates to the dividend yields in figure 3 below. Similarly, the yields are erratic and unpredictable but the last 5 years still shows us an increasing trend.

GMA Dividend Yield
Figure 3. GMA Dividend Yield

Investment Performance

Now, if we are going to simulate the stock price and dividends paid by GMA7, the results might amaze you as it amazed me. The table below simulates the performance of a 100k lump-sum investment 10 years ago. What we are comparing here is the performance of our capital G/L vs the performance of our capital with dividends.

GMA Investment Simulation
Figure 4. Investment Simulation

If we invested 100k in 2010 at 7.20/share, we would have lost around 25% of our capital if was not giving dividends. But since GMA7 is paying us dividends, we didn’t only not lose money, we even gained some cash because of it. That’s 49% gain instead of a 25% loss. Here’s a graphical representation of the excel. Capital G/L without dividends is only a simulation of its stock price to appreciate the effect of dividends in our capital.

GMA Investment Simulation
Figure 5. GMA Investment Simulation since 2010

Clearly, dividend paying stocks can provide us with an extra layer of security in our investment. Also, dividend stocks with higher yields provides greater amplification of price appreciation in good market conditions and better capital protection against bear markets and corrections. 

Pag-ibig MP2 VS. GMA7

Since GMA7 has dividend data since 2008, we can compare its performance with the MP2 program. MP2 started in 2011, so we will be comparing data from 2011 until 2018. I will be updating this when the 2019 MP2 yield comes out in a few weeks or months. Let’s now see how GMA7 fared with Pag-ibig MP2, on of the country’s best investment vehicle available to date.

Pag ibig MP2 vs GMA7 Dividends
Figure 6. Pag-ibig MP2 vs. GMA7 dividends graph

Pag-ibig MP2 clearly won against GMA7 since the latter has been on a downtrend since 2011. However, as seen on figure 7 below, our capital only lost by around 20,000 to MP2. Also, we didn’t really lose money because at the end of 2018, the total value is still above our starting capital of 100,000

Pag ibig MP2 vs GMA7 dividends excel
Figure 7. Pag ibig MP2 vs GMA7 dividends excel

Just to review, GMA’s dividend rate last 2019 was 0.45 cents per share and the current price is 5.31 per share. If they are going to maintain the dividend rate the same, the yield this year would be at 8.47%. If you are going to invest in this stock, make sure you do your due diligence first. Nothing is sure in the stock market anyway, only the market can decide. So better plan accordingly and manage your risks before investing.

That wraps up our 2020 GMA7 dividend review! Leave comments down below. Share, like subscribe where ever possible!

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    Whether you’re a chartist or a fundamentalist, dividends should play an essential part of your investment strategy. There’s only two ways to earn from the stock market anyway, why not earn from both.

    – Chilliinvest

    Watch and Chill!

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