Great Graphic: Rewarding U.S. Shareholders

Those who draw their income primarily from wages have been squeezed.  However, those that draw more income from their savings and investments have fared better.  This is the story behind the growing disparity of income in the United States.
Shareholders have been rewarded. The top Great Graphic was posted by Matt Phillips on Quartz  It was taken from Goldman Sachs Research.  It shows both the authorized and executed share buyback schemes among the S&P 500  through Q3 13.  The authorized programs area approached record size.
There are a number of ETFs that try to capitalize on share buyback programs or favorable insider activity or strong hand buying.  The Bloomberg chart here shows a the S&P 500s performance since the beginning of last year (purple line), with three ETFs in this space.  The white line is PowerShares Buyback Achievers Portfolio (PKW).  The yellow line is the Guggenheim Insider Sentiment (NFO), which looks at trends in insider buying and analysts’ opinions.   The green line is TrimTabs Float Shrink (TTFS).  It uses a screen for to assess the quality of the reduction in the free float.  This summary of ETFs in this space should not be confused with a trade recommendation or investment advice.We are skeptical, though of Phillips effort to draw a connection between the cash holdings of almost $2 trillion to the share buyback efforts.   Yet, it seems as if many corporations are borrowing to fund the repurchase programs.

Separately, Phillips points to another way shareholders are being rewarded:  dividends.  He notes that as of the end of January 420 of the S&P 500 were paying dividends, which is the most since 1998.  S&P 500 companies will pay out an estimated $330 bln in dividends this year, which represents a new record.

This piece is cross-posted from Marc to Market with permission.

One Response to "Great Graphic: Rewarding U.S. Shareholders"

  1. benleet   February 18, 2014 at 4:40 pm

    From Christian Weller's January report: "From December 2007—when the Great Recession started—to September 2013, nonfinancial corporations spent, on average, 98 percent of their after-tax profits on dividend payouts and share repurchases. In short, almost all of nonfinancial corporate after-tax profits went to keep shareholders happy during the current business cycle."
    See here —
    From William Lazonick's article at Huffington Post:
    "For 2001-2010, 459 companies in the S&P 500 Index in January 2011 distributed $1.9 trillion in dividends, equivalent to 40 percent of their combined net income, and $2.6 trillion in buybacks, equal to another 54 percent of their net income. After all that, what was left over for investments in innovation, including upgrading the capabilities of their workforces? Not much."
    See here —