NEW YORK, Nov. 22, 2010 /PRNewswire/ -- Approximately 71%
(353) of companies in the S&P 500 bought back stock and paid
dividends during the three-year period ending June 30, 2010, according to a new report issued
by Standard & Poor's Equity Research. Another 19% of the
companies (95) just repurchased their common stock, while about 8%
(39) just paid cash dividends and the remaining companies (13)
eschewed both dividends and buybacks.
"From a total return perspective, companies that focused solely
on dividends or solely on buybacks fared much better than those
engaged in both strategies," said Todd
Rosenbluth, an S&P Equity Analyst and co-author of the
report. Companies that paid only a dividend generated an
average unweighted total return of minus 12.7%, slightly worse than
the minus 10.5% return for the buyback-only group, but considerably
better than the dividend and buyback group return of minus 21.3%.
"This may reflect skepticism about adequate growth prospects
and/or resources for companies committing capital to dividends and
buybacks," said Mr. Rosenbluth.
While cash on the balance sheets of most major U.S. companies
continues to grow, the Financial sector is one notable exception to
this trend. "Perhaps in part because of the need to repay
TARP money, or perhaps because fundamentals at banks and brokers
have been weak over the last three years, cash and short-term
investments in the Financials sector were essentially flat during
this time frame, " said Stewart
Glickman, an S&P Equity Analyst and co-author of the
report. "Looking at all non-Financials, cash balances are up
more than 40% since the end of June
2007, but the pace of cash hoarding has begun to slow."
Among the companies not paying dividends or buying back their
stock are Electronic Arts (Nasdaq: ERTS 15*), Jacobs Engineering
(NYSE: JEC 40*****), and Ford Motor Company (NYSE: F 16***).
ERTS and JEC have been using their cash and short-term
investments for acquisitions, according to the S&P equity
analysts covering the companies. Ford did not make any
acquisitions in the last few years, choosing to augment its cash by
streamlining its operations amid the challenges faced by the auto
industry.
For more information about this report, which looks at past and
potential future uses of cash on a GICS sector level, please
contact the S&P Product Specialist desk at 1-877-219-1247 or
via email at www.getmarketscope.com.
Members of the media may get a full copy of the report by
contacting marc_eiger@standardandpoors.com.
About Standard & Poor's Equity Research Services
As the world's largest producer of independent equity research,
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for their investors and advisors. Standard & Poor's team
of experienced U.S., European and Asian equity analysts use a
fundamental, bottom-up approach to assess a global universe of
multi-asset class securities across industries worldwide.
Follow Standard & Poor's equity analysts' U.S. market
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http://www.equityresearch.standardandpoors.com/.
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separately from any other analytic activity of Standard &
Poor's. Standard & Poor's Equity Research Services has no
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Standard & Poor's equity analysts is governed by the firm's
Research Objectivity Policy, a copy of which may also be found at
www.standardandpoors.com or by clicking here
http://www2.standardandpoors.com/spf/pdf/equity/ResearchObjectivityPolicy2005.pdf.
Disclaimer:
The S&P 500 is an unmanaged, statistical composite and its
return does not reflect payment of any sales charges or fees an
investor would pay to purchase the securities it represents. Such
costs would lower performance. It is not possible to invest
directly in an index. Past performance of the index is not
indicative of future returns.
For more information
contact:
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Marc Eiger, Communications,
Tel.: 212-438-1280
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marc_eiger@standardandpoors.com
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SOURCE Standard & Poor's