Sunday, April 04, 2010

Dividends And Buybacks On The Increase

It is projected that dividends and stock buyback activity will increase in the second quarter of 2010 versus 2Q 2009. According to Howard Silverblatt, Senior Index Analyst at Standard & Poor's:

[expectations are that] second quarter 2010 dividend payments will be higher than second quarter 2009, but still 17% off 2Q 2008. A surge in increases is expected late in the third quarter if companies feel secure in their prospects to commit to future payments. 2010 payments are estimated to be up 5.6% to US$206B. This compares to payments of US$196B in 2009, US$248B in 2008, US$247B in 2007, and US$ 225B in 2006.

With respect to buybacks, Howard Silverblatt notes:
[buybacks are estimated to show] a 37% increase in fourth quarter 2009 over the third quarter 2009, which is 1% less than the fourth quarter of 2008 and 66% less than 4Q 2007. Looking at issues, MSFT (US$ 3.87B versus US$ 1.54B for Q3 2009), KO (US$ 1.51B versus minor) and PG (US$ 1.46B versus US$ 0.01B) returned, with HPQ increasing (US$ 2.7B versus US$ 2.1B), as CSCO (US$ 1.37B versus US$ 1.87B) and DTV (US$ 0.08B versus US$ 0.94B) reduced.

Overall, dollar purchases are ahead by over 39%, but are up 30% void of top issues. Lots of buyback announcements have occurred, but they come down to authorizations and a willingness to get back in the market – actual buys will depend on market conditions. Given that companies are still covering options to prevent dilution...

Source: Standard & Poor's

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