<<roni, I have known you for many years now, and have the utmost respect for you and your trading skills, but I just can't agree with the above assertions without some supporting data or examples. >>
Good morning JimisJim,
Thanks for the compliment :). I am leaving early tomorrow morning on a trip back to the states and will be gone for a couple of weeks. I have come to the view that a moderate and systematic program of share count reduction is, for some companies, a positive. That is certainly not a universal statement and must be looked at on a company by company basis - just like many of the other financial, management and operational information we look at.
I have written some on this board about popular dividend growth stocks that have systematically reduced their share counts over the past decade. Just tried to use the search function to find the posts, but without success. Too many drop down lists and could not just enter my name. What I found, to recap, is a significant number of dividend growth blue chippers that had reduced their share count via buybacks. Not all of them certainly, but a number of core DG names. The post in which I posted the most information was in a exchange with chowder, who had a dimmer view of buybacks that I do. I decided to go look at some data, since most of the statements made on this topic, including mine, seemed to be primarily opinion, based, it seemed on anecdotal data.
More recently I took a look at IBM, in the context of a discussion on the potential impacts of Apple's current capital allocation program. Here is what I found (mostly from the key ratios page on Morningstar.com, historical share price data from Yahoo Finance). I do not own IBM.
In the past decade IBM has reduced its share count by 38%.
Since 2009:
Net income has increased 22%
The dividend has increased 72% (83% if one used the TTM figure rather than the 2013 total) from $2.15 to $3.70 (3.95 if using TTM) 5 year dividend CAGR is a bit over 14% according to dividendinvestor.com
EPS has increased 49% from $10.01 to $14.94
Share price has increased from $82.22 a the start of 2009 to $186.29 at the close yesterday
Payout ratio? Increased from 21.5% to 24.9% during that time period, largely removing it from consideration as a primary reason for the increase in dividends during that time. IMO.
Time to take a cuppa out to the patio and then start preparing for travel. House/cat sitter came by to the get the key and paychecks for the maid and pool service yesterday. Retirement is good :) |
