Stock buybacks and dividends become a $1.5 trillion political target

Yet redemptions and dividends are extremely important to investors.

Consider that S&P 500 companies will spend more than $500 billion on dividends this year and more than $1 trillion on stock buybacks, according to S&P Dow Jones Indices principal analyst Howard Silverblatt. That’s a total of $1.5 trillion, more than ever before.

No wonder these huge cash flows are getting attention.

As investors, consumers or ordinary citizens of the planet, it is worth considering the importance of buybacks and dividends – whether they are a form of self-serving corporate profligacy, a wise use of capital or perhaps something something in between, as Aswath Damodaran, a New York University finance professor, suggests.

“It’s really about price and value,” he said in an interview. “Returning money to investors is a good thing, if the company doesn’t put it to better use. It’s a bad thing if it’s done in a way that destroys shareholder value. It’s all in the numbers.

Windfall earnings from energy companies supported buyback and dividend totals.

ConocoPhillips announced earlier this month that, through a special dividend, it was “raising the planned 2022 return of capital by $5 billion to $15 billion.” EOG Resources made a similar move by declaring a special dividend of $1.50 per share, double its regular quarterly dividend. And Exxon Mobil said while maintaining its dividend, it would spend $30 billion on buybacks, tripling the previous total.

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