Dividends hit a record
The rare decline for stock buybacks comes amid high interest rates pressuring corporate borrowing. Buyback amounts still remain far higher than before the pandemic, but the path ahead is unclear with interest rates expected to remain higher for longer.
The technology, healthcare and financial sectors had the biggest reductions in buybacks in 2023.
“It is all about companies finding the appropriate balance between capital expenditure, their financing needs and shareholder returns via dividends, buybacks or both,” said
Companies are making strong profits as consumers keep spending on goods and services. Net profit margins for the S&P 500 were just under 10.8% in 2023. That's down slightly from recent years but still allowing companies to stockpile cash while also keeping investors happy with healthy dividends.
Dividends have been rising steadily in the
Banks contributed half of the world's dividend growth as higher interest rates allowed them to boost profits. Car makers were also a big global contributor to dividend growth. Profits in that sector rose along with prices for new and used cars.
Still, recent economic warning signs mean some uncertainty and potential caution for the rest of 2024. Economists expect economic growth to slow from the surprisingly strong pace in 2023. Inflation has been easing, but it still remains higher than the
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