Companies to return a record $1 trillion to investors this year in form of buybacks and dividends, estimates S&P

  • "Given the environment ... and the 'desire' of companies to show shareholder return, the return to a double-digit actual cash payment gain (year-over-year) seems feasible, along with the first trillion-dollar year of dividends and buybacks for the S&P 500," writes Howard Silverblatt.
  • Silverblatt points out that 169 S&P 500 members hiked their dividends in the first four months of the year, while no company in the index cut their dividend.
  • He also says, citing initial reports, that buybacks "produced an outrageous 72% gain."
Daniel Acker | Bloomberg | Getty Images

Publicly traded companies in the U.S. could do something they have never done before.

Through the end of April, S&P 500 companies are on track to give back a record $1 trillion to investors through dividend increases and stock buybacks, according to data compiled by Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.

"Given the environment, availability of cash, increased income expectations, and the 'desire' of companies to show shareholder return, the return to a double-digit actual cash payment gain (year-over-year) seems feasible, along with the first trillion-dollar year of dividends and buybacks for the S&P 500," wrote Silverblatt in a note Monday.

In the note, he pointed out that 169 S&P 500 members hiked their dividends in the first four months of the year, while no company in the index cut its dividend. That's "an event not seen since at least 2003 (when my records begin)," Silverblatt said.

He also said, citing initial reports, that buybacks "produced an outrageous 72% gain due to a few significant issue level increases, but even excluding those buybacks they are up between 25% and 42% depending on the exclusions."

The strong shareholder returns follow the slashing of the U.S. corporate tax rate. Late last year, President Donald Trump signed a bill that cut the corporate rate to 21 percent from 35 percent.

But despite the tax cut and the strong shareholder returns expected by Silverblatt, the S&P 500 is down more than 1 percent for 2018, signalling investors may need all the returns they can get.

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