Buybacks and Dividends On Record $Trillion Pace

At the current pace, 2018 will mark the first year that corporate buybacks and dividends top the $trillion mark.

Buybacks among S&P 500 Index members hit a record in the first quarter and more than a third of the index raised dividend payments.

Key Points

  1. At $1.6 trillion, cash and cash equivalent stayed near all-time highs
  2. Share purchases surged 34 percent to a record $178 billion, surpassing the previous peak of $172 billion reached in 2007
  3. Tech companies accounted for about a third of total buybacks, with repurchases more than doubling from a year earlier. Apple set a record with $22.8 billion
  4. Financial firms spent roughly the same as last year, a sign that Fed approved buybacks may have been fulfilled
  5. No company cut its dividend for the first time in at least 15 years. Among those that raised payouts, the increase averaged 10 percent
  6. Capital expenditures are up 21% as well to $159 billion.

In regards to point number one, most of that cash is actually debt.

Point number two is interesting. Here we go again?

Capital expenditures are up 21% but how much of that was planned anyway? It is doubtful Trump tax cuts played a major role in expenditures.

Question of the day: Is this what it takes to hold the stock market flat?

Mike "Mish" Shedlock

Comments (16)
No. 1-16
Sechel
Sechel

Sounds like the tax plan is performing as advertised

Bam_Man
Bam_Man

And notice how back in 2009-10, (when stocks were actually cheap) there was almost no buyback activity going on. How do you spell "M-A-L-I-N-V-E-S-T-M-E-N-T"?

Greggg
Greggg

Trump seems to rely heavily on marketing targeted at uninformed listeners. He seems to be easily swayed by his insider staff and WTH is Kushner still in there?

truthseeker
truthseeker

As I’ve said before buybacks increase earnings, which pushes the stock up to make executives options more valuable Unless you are a small company who needs options to be able to compete for top talent, gigantic buybacks are extremely hard to justify. Instead of using debt for research and development, buying new equipment, and hiring new workers to increase market share, corporate America keeps taking on massive debt to line their own greedy pockets so that when the downturn comes, the first thing they’ll do is to start laying people off.

GiT
GiT

Dividends and buybacks are real flows of money that leave the stock market. In theory, a buy-back of 50% of shares has the same effect of so loss of 50% of the price.