GE has been much in the news. It announced that it would cut its dividend in half. While that would seem to have been much anticipated, the stock nevertheless dropped seven and a half percent. Thomas Gryta reports in the Wall Street Journal:
"General Electric Cuts Dividend by Half and Slashes Profit Goals
Industrial giant to revamp board as new CEO pursues restructuring"
New SEC rules will make GE look worse still according to Tomi Kilgore on Market Watch,
"GE’s stock suffers worst day in 8 1/2-years after transformation plan unveiled," Nov 13, 2017
Showing posts with label Dividends. Show all posts
Showing posts with label Dividends. Show all posts
Monday, November 13, 2017
Thursday, September 18, 2014
Buying Back Corporate America
Are U.S. corporations pulling up the drawbridge? Finding an alternative to dividends? or Overlevering themselves?
The Economist argues that share buybacks may be encouraging shorttermism and that by "reducing the number of shares outstanding, buy-back schemes can also artificially boost a firm’s earnings per share." Based on its survey, buyback activity "in the S&P 500 index" reached $500 billion in 2013, "close to the high reached in the bubble year of 2007:" that is a third of U.S. corporate cashflow. Furthermore, the Economist notes that "buy-backs have usurped dividends as the main way listed American firms give money back to their owners, accounting for 60% of cash returns last year."
James McIntosh stresses the levering that buybacks are driving and warns investors, in this September 9th video, that equity markets may seem calm but the cashflow, and debt raising seem ominously like 2007: the calm before the storm. Mackintosh, the FT's investment editor, charts the close relationship among buybacks, debt raising, and cashflow. Corporate share repurchases have been converting cashflow surpluses into deficits which firms are financing with ever more debt. The result is more levered balance sheets.
Was Janet Yellen's goal in driving down interest rate to relever corporate balance sheets?
The Economist argues that share buybacks may be encouraging shorttermism and that by "reducing the number of shares outstanding, buy-back schemes can also artificially boost a firm’s earnings per share." Based on its survey, buyback activity "in the S&P 500 index" reached $500 billion in 2013, "close to the high reached in the bubble year of 2007:" that is a third of U.S. corporate cashflow. Furthermore, the Economist notes that "buy-backs have usurped dividends as the main way listed American firms give money back to their owners, accounting for 60% of cash returns last year."
James McIntosh stresses the levering that buybacks are driving and warns investors, in this September 9th video, that equity markets may seem calm but the cashflow, and debt raising seem ominously like 2007: the calm before the storm. Mackintosh, the FT's investment editor, charts the close relationship among buybacks, debt raising, and cashflow. Corporate share repurchases have been converting cashflow surpluses into deficits which firms are financing with ever more debt. The result is more levered balance sheets.
Was Janet Yellen's goal in driving down interest rate to relever corporate balance sheets?
Wednesday, October 09, 2013
Dividends: To Pay or Not To Pay, That Is the Question.
Dividends do not matter
Oct 9, 2013 : Low bond yields have led investors to place more importance on stock dividends. John Authers argues that these are special circumstances, and that there is still some truth in the Miller & Modigliani theorem – which implies dividends do not matter. He is referring to the M&M Dividend Irrelevance, as opposed to the M&M capital structure irrelevance:
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