The equity market capitalization of the S&P 500 Index is $44 trillion dollars as of 5/31/24. The forecasted earnings of the index for 2024 is expected to surpass $2.0 trillion dollars. That would be the best ever earnings for the index. It would also be the 4th year in a row where earnings have been significantly higher than the $1.3 trillion earned in 2019, which at the time was the highest ever.

In summary, the earnings produced by the largest American companies are on an unprecedented tear. The dividend payout ratio of the S&P 500 Index is approximately 30% of earnings. Based on $2.0 trillion of anticipated earnings, that leaves a lot of “extra” earnings (~ $1.4 trillion) to reinvest in the business or to reward shareholders.

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