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General Discussion => Welcome and General Discussion => Topic started by: RedmondStash on May 25, 2019, 11:47:05 AM

Title: "Dividends and Buybacks Now Larger than Earnings for S&P 500" - article
Post by: RedmondStash on May 25, 2019, 11:47:05 AM

https://thesoundingline.com/dividends-and-buybacks-now-larger-than-total-reported-earnings-for-the-entire-sp-500

Thoughts?

Title: Re: "Dividends and Buybacks Now Larger than Earnings for S&P 500" - article
Post by: bacchi on May 25, 2019, 02:08:04 PM

There was almost $500B in repatriated profits through Q3 2018. That's over 40% of total reported earnings.

Also, debt financed buybacks doesn't seem to be the trend.

 https://www.bloomberg.com/news/articles/2019-01-27/debt-financed-share-buybacks-dwindle-to-lowest-level-since-2009

I'd be more concerned about buybacks stopping and the party stopping with it.

Title: Re: "Dividends and Buybacks Now Larger than Earnings for S&P 500" - article
Post by: marty998 on May 25, 2019, 10:14:44 PM

Quote from: RedmondStash on May 25, 2019, 11:47:05 AM

https://thesoundingline.com/dividends-and-buybacks-now-larger-than-total-reported-earnings-for-the-entire-sp-500

Thoughts?

Do you have any thoughts on this?

If true, it can't go on forever... that's just simple maths.

Title: Re: "Dividends and Buybacks Now Larger than Earnings for S&P 500" - article
Post by: mizzourah2006 on May 26, 2019, 07:25:21 AM

A couple things..

1. Many older companies were already at 50-70% of earnings as dividends (think your Coca Cola’s, JNJs, etc.).
2. Buybacks often occur over extended periods of time with cash balances that have been accumulated over time.
3. Capital investments into the business aren’t coming from earnings because the business isn’t required to count that money as earnings (which would require corporate taxes to be paid).