The tax cuts from the 2017 tax overhaul aren’t being used by Corporate America to gorge stock shareholders with stock buybacks and dividends, as previously thought, Bloomberg reports.
While it’s true spending by companies in the S&P 500 Index appears to be higher for buybacks and dividends, Bloomberg contends comparing spending as a ratio against companies’ market value is a fairer way to measure.
Stock buybacks set an all-time high in the second quarter of this year in dollar terms. But as a percent of market value, the buybacks are
still far below the post-financial crisis record of 1.12% in the third quarter of 2011.
While capital expenditure spending has picked up, cash piles shrunk for the first time since the end of 2015. Third quarter results are trending towards another decline—the first time since 2006 that cash declined in two consecutive quarters.
