Investment Alert: Petron Corp. to Issue Preferred Shares With Dividends Up to 7.2% p.a.

The country's largest oil refiner, Petron Corp., is starting the sale of its preferred shares on Monday, May 27, at a price of P1,000 each, the company announced in a disclosure to the stock exchange last week. 

The indicative dividend rates of the share are at 6.6% to 6.95% income per annum for Series 3A and at 6.85 to 7.20% for the Series 3B. Those ranges are higher than the median dividend yield of preferred stocks currently listed in the Philippine Stock Exchange, which reached as high as 6.6% in 2018.

Those rates also mean that, for an investor holding one preferred share, dividends can reach up to P72. That is more than four times larger than the latest dividend issued by the company at P17.15. 

To be sure, individual investors' gross dividend rate is subject to a 10% withholding tax. Still, that's comparatively lower than the tax charged on bonds which is at 20%. 

Interested investors can purchase Petron Corp.'s preferred shares at a minimum of P50,000, or 50 shares, and can purchase additional shares in increments of 10. The offer period starts on Monday, May 27 until Friday, May 31. The preferred shares will be issued on June 7. 

Interested investors are advised to read through the preliminary prospectus first, which can be found on the company’s official website.

The joint lead underwriters for the offering are BDO Capital & Investment Corporation, BPI Capital Corporation, China Bank Capital Corporation and PNB Capital and Investment Corporation. 

For the first quarter of the year, Petron Corp.'s net income plunged to P1.3 billion, a 77-percent drop from its reported income from the same period last year. The company blamed rising crude prices and the implementation of the second phase of the Tax Reform for Acceleration and Inclusion Law, which imposed taxes on oil, for its sluggish sales.