S&P 500 Companies Spend 95% of Profits on Buybacks, Payouts

[ksen]

http://www.bloomberg.com/news/2014-...d-almost-all-profits-on-buybacks-payouts.html

Companies in the Standard & Poor’s 500 Index really love their shareholders. Maybe too much.

They’re poised to spend $914 billion on share buybacks and dividends this year, or about 95 percent of earnings, data compiled by Bloomberg and S&P Dow Jones Indices show. Money returned to stock owners exceeded profits in the first quarter and may again in the third. The proportion of cash flow used for repurchases has almost doubled over the last decade while it’s slipped for capital investments, according to Jonathan Glionna, head of U.S. equity strategy research at Barclays Plc.

Thank god. The quicker we can get more cash into the hands of the wealthy the quicker we can turn this economy around.

 

[J842P]

Um, shareholders are not necessarily the wealthy. Indeed, if you are in he middle class you are likely a shareholder of many S&P 500 companies.

 

[ksen]

good post!

 

[untermensche]

Um, shareholders are not necessarily the wealthy. Indeed, if you are in he middle class you are likely a shareholder of many S&P 500 companies.

A non-controlling owner of a tiny fraction of available stocks.

This is pure gambling. You are betting on things totally out of your control.

 

[Harry Bosch]

Um, shareholders are not necessarily the wealthy. Indeed, if you are in he middle class you are likely a shareholder of many S&P 500 companies.

A non-controlling owner of a tiny fraction of available stocks.

This is pure gambling. You are betting on things totally out of your control.

The long term rate of return on investing in Vanguard 500 is greater than 8%. That's a lot better than gambling!

 

[bilby]

A non-controlling owner of a tiny fraction of available stocks.

This is pure gambling. You are betting on things totally out of your control.

The long term rate of return on investing in Vanguard 500 is greater than 8%. That's a lot better than gambling!

But it is only available to people who have money left for such investments, after they pay their rent, buy food to eat, and cover the other unavoidable costs of living. So it is a mechanism to get cash into the hands of the wealthy.

 

[untermensche]

A non-controlling owner of a tiny fraction of available stocks.

This is pure gambling. You are betting on things totally out of your control.

The long term rate of return on investing in Vanguard 500 is greater than 8%. That's a lot better than gambling!

It is gambling because the small investor has absolutely no control over the outcome. They are gambling on the actions of others.

And past performance is not a guarantee of future performance.

 

[HaRaAYaH]

The long term rate of return on investing in Vanguard 500 is greater than 8%. That's a lot better than gambling!

It is gambling because the small investor has absolutely no control over the outcome. They are gambling on the actions of others.



And past performance is not a guarantee of future performance.

What is your alternative? Since 1929, over a 25 year period stocks have provided the greatest return on investments compared to other options.

You want a CD at 1.25%?
Bonds that can go down in value if interest rates go up?
Real Estate that can take a crapper like in 2008?

 

[bilby]

It is gambling because the small investor has absolutely no control over the outcome. They are gambling on the actions of others.



And past performance is not a guarantee of future performance.

What is your alternative? Since 1929, over a 25 year period stocks have provided the greatest return on investments compared to other options.

You want a CD at 1.25%?
Bonds that can go down in value if interest rates go up?
Real Estate that can take a crapper like in 2008?

Why exactly do you think we need mechanisms for people with money to get more money without effort?

 

[Rhea]

Um, shareholders are not necessarily the wealthy. Indeed, if you are in he middle class you are likely a shareholder of many S&P 500 companies.

Are you sure? I see these stats of how much the average American has in savings and I'm dubious that there is much non-wealthy impact from dividends. I would suspect that indeed most of it does go to "the wealthy."

 

[untermensche]

It is gambling because the small investor has absolutely no control over the outcome. They are gambling on the actions of others.

And past performance is not a guarantee of future performance.

What is your alternative? Since 1929, over a 25 year period stocks have provided the greatest return on investments compared to other options.

You want a CD at 1.25%?
Bonds that can go down in value if interest rates go up?
Real Estate that can take a crapper like in 2008?

You are saying that it is a safer bet than other bets based on prior experience.

But you are not saying it isn't gambling.

 

[Axulus]

The long term rate of return on investing in Vanguard 500 is greater than 8%. That's a lot better than gambling!

But it is only available to people who have money left for such investments, after they pay their rent, buy food to eat, and cover the other unavoidable costs of living. So it is a mechanism to get cash into the hands of the wealthy.

Which is everyone above the poverty line if they choose to live at the poverty line.

 

[Axulus]

What is your alternative? Since 1929, over a 25 year period stocks have provided the greatest return on investments compared to other options.

You want a CD at 1.25%?
Bonds that can go down in value if interest rates go up?
Real Estate that can take a crapper like in 2008?

Why exactly do you think we need mechanisms for people with money to get more money without effort?

Equity and lending is necessary to have a healthy business sector. If you would prefer to live in a communist hell hole, be my guest.

 

[laughing dog]

Why exactly do you think we need mechanisms for people with money to get more money without effort?

Equity and lending is necessary to have a healthy business sector. If you would prefer to live in a communist hell hole, be my guest.

Perhaps, but payouts and buyouts are not conducive to investing that creates physical capital formation and economic growth.

 

[James Brown]

Stocks of more than 60 major companies can be purchased, commission-free, for as little as $10 at Loyal3.

 

[dismal]

http://www.bloomberg.com/news/2014-...d-almost-all-profits-on-buybacks-payouts.html

Companies in the Standard & Poor’s 500 Index really love their shareholders. Maybe too much.

They’re poised to spend $914 billion on share buybacks and dividends this year, or about 95 percent of earnings, data compiled by Bloomberg and S&P Dow Jones Indices show. Money returned to stock owners exceeded profits in the first quarter and may again in the third. The proportion of cash flow used for repurchases has almost doubled over the last decade while it’s slipped for capital investments, according to Jonathan Glionna, head of U.S. equity strategy research at Barclays Plc.

Thank god. The quicker we can get more cash into the hands of the wealthy the quicker we can turn this economy around.

So, what do you want? Corporations to hoard their cash? Invest it in becoming bigger and eviler?

You have never quite managed to explain why this is not exactly what they should be doing.

 

[jonatha]

http://www.bloomberg.com/news/2014-...d-almost-all-profits-on-buybacks-payouts.html



Thank god. The quicker we can get more cash into the hands of the wealthy the quicker we can turn this economy around.

So, what do you want? Corporations to hoard their cash? Invest it in becoming bigger and eviler?

You have never quite managed to explain why this is not exactly what they should be doing.

Raising wages?

 

[J842P]

Um, shareholders are not necessarily the wealthy. Indeed, if you are in he middle class you are likely a shareholder of many S&P 500 companies.

Are you sure? I see these stats of how much the average American has in savings and I'm dubious that there is much non-wealthy impact from dividends. I would suspect that indeed most of it does go to "the wealthy."

Well, of course, it depends what you mean by the wealthy. The last I checked, and I'll look up the source for you when I get home, for the middle two quartiles, you have over 50% of people with retirement accounts (which I'll assume means things like IRAs or 401ks, I'm not sure if that included defined benefit plans or not).

Generally what you see is a bimodal situation were you either have savings or you don't.


My point is simply that large swaths of the American public mostly composed of what everyone would agree are ordinary people have some sort of stock market dependent retirement plan, either directly like a 401k or indirectly like a pension plan. I'm not trying to argue this is a desirable state of affairs, although, I do believe a low-cost index product is a pretty good strategy.

 

[dismal]

So, what do you want? Corporations to hoard their cash? Invest it in becoming bigger and eviler?

You have never quite managed to explain why this is not exactly what they should be doing.

Raising wages?

It seems you are not familiar with the basic concept of what a business exists to do.

 

[ksen]

http://www.bloomberg.com/news/2014-...d-almost-all-profits-on-buybacks-payouts.html



Thank god. The quicker we can get more cash into the hands of the wealthy the quicker we can turn this economy around.

So, what do you want? Corporations to hoard their cash? Invest it in becoming bigger and eviler?

You have never quite managed to explain why this is not exactly what they should be doing.

Read my OP again, I did say this is what they should be doing. Investing 95% of your profits, and sometimes even borrowing to do so, into stock buybacks and increased dividends is the perfect model to get money into the hands of job creators.