4 ms·
The dividend yield doesn't matter (alone). The more common way to return cash to shareholder's is via buybacks. The actual 'yield' of the market should thus be
by tryptophan 7y ago
The dividend yield doesn't matter (alone). The more common way to return cash to shareholder's is via buybacks.
The actual 'yield' of the market should thus be calculated as div yield + buyback yield, giving the investor yield, which is what intellectually honest people should compare to treasury yields.
- SilasX 7y agoRight, but that just means dividend yield understates the misalignment, and we passed the weirdness point (for lack of a better term) a long time ago.
- MuffinFlavored 7y ago> The more common way to return cash to shareholder's is via buybacks. Is this more common throughout history or only common in today's modern market of cheap interest rates?
- bulletsvshumans 7y agoBuybacks directly cause dividend yields to go up because they reduce the number of outstanding shares, causing the remaining shareholders to receive a greater stake when future profits are distributed amongst fewer parties.
- im3w1l 7y agoAlso got to take into account all the newly emitted stock, e.g. employee rsu (my understanding is that most companies net dilute over time).