Introduction
Dividend Investing vs Growth Investing is a fundamental decision every investor must face, and in the context of the Philippine stock market the question becomes even more meaningful. In this article we examine both strategies, highlight their respective strengths and weaknesses, and evaluate which may perform better or suit different investor profiles in the Philippines.
What Is Dividend Investing?
Dividend investing focuses on buying stocks of companies that distribute a portion of their profits to shareholders on a regular basis. In the Philippine market, many blue-chip companies and real estate investment trusts (REITs) offer attractive dividend yields. For instance, Philippine high-dividend stocks screen lists show yields up to around 10 %. TradingView+1
Advantages:
- Steady income stream via dividends.
- Lower volatility compared with purely growth-oriented stocks.
- Potential to reinvest dividends for compounding.
Disadvantages: - Limited upside if business growth is already mature.
- Dividend cuts are possible if earnings decline.
What Is Growth Investing?
Growth investing involves selecting stocks of companies expected to expand their earnings at above-average rates, often reinvesting profits instead of paying dividends. In the Philippines, growth candidates may be younger companies in sectors like renewable energy, technology or consumer goods. According to a growth-screening list, there are Filipino stocks that appear undervalued relative to future growth expectations. Simply Wall St
Advantages:
- Higher potential long-term capital appreciation.
- Can outperform during strong economic expansion.
Disadvantages: - Often higher risk and greater volatility.
- No or low dividend means you rely purely on price appreciation.
Dividend Investing vs Growth Investing — Key Differences
When comparing the two strategies, the distinctions can be summed up as follows:
- Objective: Dividend investing targets income; growth investing seeks price appreciation.
- Risk-reward profile: Dividend stocks tend to offer lower risk, lower but more stable returns; growth stocks offer higher risk and potentially higher returns.
- Investor type: Income-seeking investors favour dividends; investors with longer horizon and higher risk-tolerance may favour growth.
- Market suitability in the Philippines: Dividend stocks are well-represented in the Philippine market (with high yields). Growth opportunities exist but may face structural or macro constraints. For example, high-dividend stocks in the Philippines can offer yields above 10%. TradingView+1
Which Strategy Works Better in the Philippine Market?
In the Philippine context several factors tilt the balance:
- The Philippine market still has many companies offering high dividend yields, making dividend investing more accessible. According to the 2025 data, top dividend stocks in the Philippines include yields up to around 10%. Dividends.ph+1
- On the other hand, macro-economic headwinds may limit growth momentum. For instance, the Philippines is noted to likely miss its 2025 economic growth target, reducing tailwinds for growth investing. Bworld Online
Thus, for many investors in the Philippines a dividend-oriented strategy may offer a better risk-adjusted return today, especially if income is a priority. However, if you have a long horizon, higher risk tolerance and focus on sectors with growth catalysts, growth investing remains viable.
How to Combine Both Strategies
Rather than choosing one exclusively, you can build a hybrid portfolio to capture income and growth:
- Allocate, for example, 60% to dividend-yielding stocks or REITs and 40% to growth-oriented stocks.
- Use dividends earned today to gradually reinvest into growth stocks, thus compounding both income and capital appreciation.
- Regularly review your portfolio to adjust the balance as market conditions and your personal goals evolve.
Example Portfolio (Philippine Market)
| Strategy | Sample Stock | Sector | Reason |
|---|---|---|---|
| Dividend | DMCI Holdings (DMC) | Construction | High dividend yield (≈10%) in PH. TradingView+1 |
| Dividend | LT Group (LTG) | Conglomerate | High yield among large Philippine stocks. TradingView+1 |
| Growth | Renewable Energy Firm | Renewables | Long-term growth potential in Philippines. |
| Growth | Tech or Consumer Growth Company | Technology/Consumer | Leverage Philippine economic expansion and digital adoption. |
Key Takeaways
- Dividend Investing vs Growth Investing is not about one being universally better; it depends on your goals, time horizon and risk tolerance.
- In the Philippines the prevalence of high‐yield stocks gives dividend investing a relative advantage for income‐focused investors.
- Growth investing can deliver substantial returns but requires patience, risk‐tolerance and favourable macro conditions.
- A balanced blend of both strategies can provide income today and capital growth tomorrow.
Conclusion
Choosing between dividend investing and growth investing is a strategic decision. For many investors in the Philippine market seeking passive income with lower risk, a dividend-oriented strategy may be more appropriate today. However, for those with longer time horizons and a tolerance for volatility, growth investing can complement your portfolio. Ultimately combining both may offer the most robust pathway: income now and growth later.
