Htown Harry
Thinks s/he gets paid by the post
- Joined
- May 13, 2007
- Messages
- 1,525
I read this article yesterday on Bloomberg's site:
Bloomberg.com: Investment Tools
The article looked at some specific stocks, but it was the context statements that really caught my eye. Excerpt:
Many posts here and elsewhere cover the ins and outs of investing in dividend-paying stocks and mutual funds. I'm wondering if forum members could offer opinions and advice on an alternative stock and mutual fund picking strategy that focuses on companies that are choosing to return a greater portion of their profits to investors via stock buybacks.
For an investor in the accumulation phase, focused on total return in tax-sheltered accounts, it would appear that a sustained stock buyback program would be a good, albeit incomplete, indicator of healthy prospects for a stock.
If so, how should I research this strategy in more detail?
In the final analysis, is a stock buyback program likely to be anything more than a supporting indicator?
Bloomberg.com: Investment Tools
The article looked at some specific stocks, but it was the context statements that really caught my eye. Excerpt:
Companies in the S&P 500 pared buybacks to $113.9 billion in the first quarter from $117.7 billion a year ago, the first drop in four years, according to S&P data...Stock repurchases by S&P 500 companies rose to a record $589 billion last year as the index gained for a fifth year, according to S&P data. Buybacks were more than twice the value of dividends...
The statement that total stock repurchases greatly exceeded total dividends was a surprise. Maybe it shouldn't have been given the long-running trend of companies moving away from dividends...
Many posts here and elsewhere cover the ins and outs of investing in dividend-paying stocks and mutual funds. I'm wondering if forum members could offer opinions and advice on an alternative stock and mutual fund picking strategy that focuses on companies that are choosing to return a greater portion of their profits to investors via stock buybacks.
For an investor in the accumulation phase, focused on total return in tax-sheltered accounts, it would appear that a sustained stock buyback program would be a good, albeit incomplete, indicator of healthy prospects for a stock.
If so, how should I research this strategy in more detail?
In the final analysis, is a stock buyback program likely to be anything more than a supporting indicator?