It is no secret that investors love when companies pay solid dividends and when they announce strong stock buyback plans. What they love even more is when companies increase their dividends and stock buyback plans. Some investors get close to half of their total returns from dividends and buybacks over time.
24/7 Wall St. has tracked many dividend hikes and increased stock buyback authorizations over time. The raw number of dividend hikes and stock buyback expansions in 2018 has been more than impressive, and they are being driven by tax reform and repatriation of overseas cash. It turns out that taking corporate taxes down to 21% from 35% means that an additional 14 cents of every dollar earned can be used toward expanding a company, making acquisitions, increasing wages, building up a balance sheet or rewarding shareholders with more dividends and stock buybacks.
Even in mid-December, 247 Wall St. tracked 20 fresh stock buybacks that could send $100 billion back to shareholders. That tally is now set to grow much further with the continued stock buybacks announced just during the week of February 16.
These were 13 stock buyback and dividend hike announcements from the week of February 16 that were simply too large to be ignored. Some of these stories have links to expanded coverage on their buyback and dividend plans, or to earnings, and some to expanded analyst coverage on the heels of the solid news.
Aaron’s Inc. (NYSE: AAN) managed to beat earnings estimates and raise 2018 guidance, and it trades at a deep price-to-earnings (P/E) ratio discount to the market. Its shares were at one point up 190% or so after earnings on Thursday’s trading session, but Aaron’s authorized a new $500 million stock repurchase plan. It may have a low dividend yield, but that is roughly 15% of its $3.1 billion total market capitalization.
AbbVie Inc. (NYSE: ABBV) had previously announced that its taxes would be dropping, and it planned a pension boost, a capital spending boost and to increase its dividend and buybacks. AbbVie just delivered on a dividend hike to $0.96 from $0.71 and will now yield well over 3%. It also targeted a new $10 billion stock buyback plan, topping the $5 billion plan announced a year earlier.
AllianceBernstein Holding L.P. (NYSE: AB) managed to attract $19.1 billion in active net inflows and increase its average fee rate by 2.7%, impressive considering the trend toward exchange traded funds and to lower investment management and service fees. AllianceBenstein also generated positive active net flows in every client channel and asset class and in nearly every region in 2017. The new distribution in March will be $0.84 per unit, up 25% from a year ago, and it is up even higher from the prior quarterly payout. If that payout remains continuous, it would be a yield of 12%.
Applied Materials Inc. (NASDAQ: AMAT) received many analyst target hikes ahead of earnings and after earnings. But what stood out was that it doubled its dividend to $0.20 per quarter. That still only takes the yield closer to 1.5%, so we consider this a major dividend catchup, perhaps with even more to come in the years ahead. Applied Materials also added $6 billion to its stock buyback ambitions, versus a $58 billion market cap.
Arch Coal Inc. (NYSE: ARCH) beat earnings and issued 2018 guidance, and after nearly tripling its net income Arch Coal approved an increase in the company’s quarterly dividend to $0.40 per share from $0.35 per share and showed that it had continued to buy back shares in the fourth quarter. Isn’t coal supposed to be on its way out? This is still just a 1.7% yield, but it stands out due to the continued pressure on coal, even if this is targeting met-coal.