Tuesday, April 23, 2013

Dividends, Buybacks, & the Bull Market (excerpt)

Why did US stocks rally yesterday? Despite disappointing revenues, earnings expectations are holding up well during the current earnings season, with the forward earnings of the S&P 500, S&P 400, and S&P 600 all in record-high territory.

Most importantly, during the current earnings season, US corporations continue to announce dividend increases and more share buybacks. Previously, I’ve shown that this corporate cash flow into the stock market--which totaled $2.1 trillion for the S&P 500 since stock prices bottomed during Q1-2009 through Q4-2012--has been driving the bull market since it began.

On Tuesday, Apple announced that it will more than double its program to return cash to shareholders through stock buybacks and a higher dividend, spending $100 billion on the effort through the end of 2015. Its share repurchases alone will increase to $60 billion from the $10 billion it committed previously, the largest such plan in history.

Today's Morning Briefing: Money for Nothing. (1) Fearless bulls. (2) Bear raid. (3) Finding support. (4) Beware of “Dow 16,000!”? (5) Bad to ugly Markit data. (6) More recession stats out of Europe. (7) Copper much weaker than CRB spot index. (8) Bad news is still good news. (9) Draghi to the rescue? (10) Apple slices some cash for shareholders. (11) Dangerfield vs Potemkin rally. (12) Dueling ratios. (13) Dire Straits. (14) Focus on housing-related stocks. (More for subscribers.)

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