(“The price of any asset is always determined by the marginal buyer and seller, and corporations have played that role for a considerable period of time,” Mark Freeman, chief investment officer at Socorro Asset Management, told Bloomberg yesterday. “If they pull back in the near term, that would be a clear headwind for the market.” Total net corporate buyback volume will reach $700 billion this year, strategists from Goldman Sachs estimate, compared to $623 billion in 2021 and a mere $32 billion during the plague year.) -Almost Daily Grant's; 10/07/2022
While a 1% tax does not amount to much, there are arguments that this could open the door to raising buyback taxes down the line. "55% of U.S. CFOs surveyed said a hypothetical 2% excise tax on buybacks would make them rethink how they return cash to stockholders." We've lived through a thriving buyback landscape, with buybacks becoming the dominant form of corporate payout since 1997. In 1980, 80% of companies had a dividend, while just under 30% engaged in share buybacks. Currently, 40% of companies have a dividend with just over 50% engaging in share buybacks.
Goldman estimated that their would be ~$1 trillion in share buybacks among S&P constituents throughout full-year 2022. That number looks increasingly unlikely, with Goldman now estimating that number to be $700 billion. If companies begin suspending share buybacks, could we see a shift back to paying dividends as the dominant form of corporate payout? Will certain sectors, such as financials and materials, noted leaders in share buybacks, be adversely affected over sectors with lower net buyback yields? (Real-estate and Utilities)
Submitted October 16, 2022 at 01:55AM by werenotthatcool https://ift.tt/Ghj2Vbo
