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January 2019 Data Update 8: Dividends And Buybacks - Fact And Fiction

Published Sun, 10 Feb 2019 08:24:05 -0500 on Seeking Alpha

In my series of data posts, I had always planned to get to dividends and buybacks, the two mechanisms that companies have for returning cash to stockholders, at this point, but an op-ed on buybacks by Senators Schumer and Sanders this week, in the New York Times, will undoubtedly make this post seem reactive. The senators argue that the hundreds of billions of dollars that US companies have expended buying back their own shares could have been put to better use, if it had been reinvested back in their businesses or used to increase wages for their employees, and offer a preview of legislation that they plan to introduce to counter the menace. Like the senators, I am concerned about the declining manufacturing base and income inequality in the US, but I believe that their legislative proposal is built on premises that are at war with the data, and has the potential for making things worse, not better.
The Buyback Effect: Benign Phenomenon, Managerial Short-Termism or Corporate Malignancy? The very mention of buybacks often creates heated debate, because people seem to have very different views on its causes and consequences. All too often, at the end of debate, each side walks away with its views of buybacks intact, completely unpersuaded by the arguments of the other. The reason I believe is that our views on buybacks are a function of how we think companies act, what the motives of managers are and what it is that investors price into stocks.
a. Buybacks are benign
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Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
SPDR DOW JONES INDUSTRIAL AVERAGE ETF TRUST 258.88   0.0 0.00 5.54 2.17
PROSHARES ULTRAPRO SHORT S&P 500 28.78   0.0 0.00 0.00 1.96
SPDR S&P 500 ETF 288.85   0.0 0.00 5.42 1.91
PROSHARES ULTRASHORT S&P 500 31.56   0.0 0.00 0.00 1.77
POWERSHARES QQQ TRUST SERIES 1 185.48   0.0 0.00 1.49 0.82

SPDR DOW JONES INDUSTRIAL AVERAGE ETF TRUST - DIA
SPDR DOW JONES INDUSTRIAL AVERAGE ETF TRUST - DIA  


Older articles featuring Spdr Dow Jones Industrial Average Etf Trust (DIA):
With Treasury Yields Tanking, The Japanese Yen May Be A Better Hedge For Stocks
Pay Attention To The Message The Yield Curve Is Sending
Weighing The Week Ahead: Yield Curve Inversion And The Jackson Hole Agenda
Weekly High Frequency Indicators: Corporate Bond Yields Make Another New Expansion Low
P/E Ratios And Yields By Country
The Stunning Story Of Retail eREITs And Why Total Return Matters Even For Dividend Growth Investors - Part II
Lower Yields Are Center Stage
Dividends Defy Expectations
The Fed And The Yield Curve
The Inverted Yield Curve Is About To Revert

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