Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
 
 
 
Blog Home
Bob Carey
Chief Market Strategist
Bio
X •  LinkedIn
 

  S&P 500 Index Dividends & Stock Buybacks
Posted Under: Stock Dividends
Supporting Image for Blog Post

 

View from the Observation Deck  
Companies have a number of ways in which to return capital to their shareholders. As the chart above shows, cash dividends and stock buybacks have been two of the more popular methods that corporations have utilized in recent years. Dividend distributions steadily increased over the period, while share buybacks receded after peaking in Q1’22. Even so, buybacks remain a significant source of overall capital disbursements. Total shareholders return of dividends and buybacks totaled $1.487 trillion during the 2022 calendar year, up from $1.393 trillion in 2021.

  • The all-time high for the S&P 500 Index's quarterly dividend payout was the $146.1 billion distributed in Q4'22, according to data from S&P Dow Jones Indices. 
  • As the chart shows, dividend distributions increased on a quarterly basis for three of the four quarters in 2022. In fact, the companies that comprise the S&P 500 Index distributed a record $564.6 billion in dividends in 2022.
  • Quarterly stock buybacks totaled $211.2 billion in Q4'22, down from a record high of $281.0 in Q1’22, according to data from S&P Dow Jones Indices.
  • Despite the downward trend revealed in the chart, annual share repurchases stood at a record $922.7 billion for the 2022 calendar year.
  • As of Q4'22, the S&P 500 Index sectors that were most aggressive in repurchasing their stock were as follows (% of all stocks repurchased): Information Technology (27.3%); Health Care (11.6%); and Financials (10.7%), according to S&P Dow Jones Indices. 

Takeaway: Despite the record-setting levels of both dividend distributions and share repurchases, the companies in the S&P 500 Index are sitting on a mountain of cash.  Corporate cash holdings, as measured by the S&P 500 Industrials (Old) Cash & Equivalents (excluding Financials, Utilities and Transportation companies), totaled $1.58 trillion (preliminary) on 12/30/22. While the chart clearly shows that stock buybacks are receding from the high set in Q1’22, they are not alarmingly low, and the record-setting pace with which companies repurchased shares throughout 2022 could be an indicator of overall strength, in our opinion. As indicated in the chart, dividend distributions have remained relatively consistent. In our view, this is to be expected. Generally, companies tend to avoid cutting their dividend, as the action can be viewed as an indication of financial weakness. The 1% tax on stock buybacks that went into effect this year does not appear to have quelled demand. Companies announced a record $132 billion of share repurchases in January, nearly 15% higher than the previous record for the month.

This chart is for illustrative purposes only and not indicative of any actual investment. The illustration excludes the effects of taxes and brokerage commissions and other expenses incurred when investing. Investors cannot invest directly in an index. The S&P 500 Index is an unmanaged index of 500 companies used to measure large-cap U.S. stock market performance. 

Download a PDF of this post, please click here

Posted on Thursday, April 6, 2023 @ 10:15 AM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
Search Posts
MARKET ANALYSIS
Market Commentary and Analysis
Market Commentary Video
Monthly Talking Points
Quarterly Newsletter
Market Observations
Subscribe To Receive Email
 


 PREVIOUS POSTS
The Only Constant Is Change
One Measure Of Corporate Cash Holdings
Money Market Fund Assets Hit New All-Time High
Worst-Performing S&P 500 Index Subsectors YTD (Thru 3/21)
Top-Performing S&P 500 Index Subsectors YTD (Thru 3/17)
Every Year Looks Volatile Compared To 2017
How Bonds Have Fared Since 8/4/20
A Snapshot Of The S&P 500 Index Earnings Beat Rate
Passive vs. Active Fund Flows
A Snapshot of the U.S. Dollar
Archive
Skip Navigation Links.
Expand 20242024
Expand 20232023
Expand 20222022
Expand 20212021
Expand 20202020
Expand 20192019
Expand 20182018
Expand 20172017
Expand 20162016
Expand 20152015
Expand 20142014
Expand 20132013
Expand 20122012
Expand 20112011

Search by Topic
Skip Navigation Links.

 
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.