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S&P 500 firms post record shareholder payouts in 2014
[NEW YORK] Shareholder payouts from S&P 500 companies hit unprecedented levels in 2014, thanks to record cash levels, according to a report on Monday from S&P Dow Jones Indices.
Total payouts for the 500 large-cap companies listed on the S&P 500 index hit a new record high of US$903.7 billion last year, up from US$787.4 billion in 2013, the report said.
About 61 per cent of the payouts were in share buybacks, with the remainder in dividends. The payouts in dividends were at an all-time high of US$350.4 billion in 2014, but the total in buybacks, at US$553.3 billion, was slightly below the record set in 2007.
"Share count reduction continues to be the market takeaway," said Howard Silverblatt, senior index analyst at S&P Dow Jones.
"It has significantly increased earnings per share for 20 per cent of the index issues in each of the past four quarters." Big US companies are flush with cash due to highly accommodative monetary policy from the US Federal Reserve and other central banks.
Cash held by members of the broad-based S&P 500 market index totaled a record US$1.33 trillion at the end of the year, according to S&P Dow Jones data.
In buybacks, information technology was the leader of 10 industrial sectors, representing 28 per cent of the total. Apple led all companies with US$45 billion in buybacks in 2014.
Information technology also led in dividends, accounting for 14.9 per cent of payouts, slightly more than the 14.7 per cent from financials.
Silverblatt said data also showed capital spending from the S&P 500 hit a record in 2014 with US$681 billion, up 16.3 per cent from 2013.
"The shareholder return trend has been strong and appears to be increasing," he said. "Based on the recent bank declarations, 2015 may easily be another record year for dividends, potentially, its fifth consecutive annual double-digit gain. Depending on the market, it may be a record year for buybacks as well."