If publicly traded companies give back one trillion to investors this year it is something that they have never done before. According to Howard Silverblatt who is a senior index analyst at S&P Dow Jones S&P companies are prepared to give back to investors $1 trillion. This is going to be done through dividends and buying back stocks.
The S&P 500 companies have the availability of cash which will enable them to return this to investors. Silverblatt’s records only start in 2003 and he says that this return to investors has not been seen at least since then. In his remarks, he also states that one hundred and sixty-nine index members raised their dividends during the first four months of this year.
The buybacks of the stock initially reported that it produced a 72% gain. Even without this buyback, the stocks are up between 25% to 42%.
It also helps that President Trump signed a bill cutting corporations tax rate to 21% instead of the 35%. This tax cut has helped companies to create more revenue for the stockholders.
Trump passed a tax cut at the end of 2017 that had been highly contested. Because of the tax cut a trillion dollars in government payments ready for the taking. Trump announced that this trillion dollars will be spent on United States infrastructure projects. Companies are cannot wait to bid on these projects. Some companies will be huge winners while others will be on the losing end.
With the trillions of dollars in spending on infrastructure projects, this will, in turn, generate more jobs. As it generates more jobs states will also be able to create improvements. The improvements will improve people’s lives and the economy will thrive.
The growth in the stock market is not expected to fall instead it is the exact opposite. It is expected to keep growing. The companies that receive the windfall will be returning the money to the stockholders. This will be in the shape of dividends as well as repurchasing programs.
So far in 2018, there have been buybacks in the amount of $226.6 billion. Three of the largest companies that pursued repurchasers aggressively were Citi Group Incorporated, Bank of America, and J.P. Morgan Chase & Company. The one company that topped these three in repurchasing was Apple Incorporated. Apple spent over %10.1 billion on repurchasing. Since earnings are measured per share when the number of outstanding shares is reduced it is the same as if increasing revenue.