From WSJ: U.S. businesses, many of them no longer facing cash-flow woes, are returning more capital to shareholders.
Companies are spending more money on dividends and share repurchases after pausing or shrinking them last spring in an effort to preserve cash during the coronavirus pandemic.
Executives are boosting these shareholder rewards as they are growing more optimistic about the economic recovery and the outlook for their business. The U.S. economy is expected to grow by 6.4% this year, with Covid-19 vaccinations and stimulus funds prompting a surge in consumer spending.
Many companies are generating significantly more revenue than a year ago, leading some of them to reduce the cash piles they amassed during the onset of the crisis. Industrial conglomerate Johnson Controls International PLC and retailer Kohl’s Corp. , among others, in recent weeks increased their dividends and planned more share repurchases.
Companies in the S&P 500 increased their dividends by an average 11.1% during the first quarter, compared with 9% during the first quarter of 2020 and 8.8% in the 2019 period, according to S&P Dow Jones Indices, a unit of S&P Global Inc.
The companies paid out cash dividends averaging $14.68 per share for the quarter ended March 31, up from an average of $14.32 during the previous three quarters. Average dividends per share last year fell as low as $13.97 during the quarter ended Sept. 30.
Of the 70 S&P 500 companies that provided information about buybacks through April 22, 50 bought back shares. That is higher than during the past three quarters, when an average of 40 of the firms acquired their own stock. But the current count is still lower than during the first quarter of 2020, when 58 of the 70 repurchased shares.