S&P 500 Firms Return $1 Trillion to Shareholders

S&P 500 companies have returned a record $1 trillion to shareholders over the past year, helped by a recent surge in dividends and stock buybacks following sweeping corporate tax cuts introduced by US Republicans, a report on Friday showed.

In the 12 months to end of March, S&P 500 companies paid out $428 billion in dividends and bought up $573 billion of their own shares, according to S&P Dow Jones Indices analyst Howard Silverblatt, Reuters reported.

That compares to combined dividends and buybacks worth $939 billion during the year through March 2017, Silverblatt said in a research note.

Earnings per share of S&P 500 companies surged 26% in the March quarter, boosted by the Tax Cuts and Jobs Act passed by Republican lawmakers in December.

Companies have been returning much of that profit windfall to shareholders via share buybacks and increased dividends at never before seen amounts, highlighted by Apple’s record $23.5bn worth of shares repurchased in the first quarter.

S&P 500 companies have also ploughed some of the windfall from lower taxes into investments toward growth or becoming more efficient. First-quarter capital expenditures totaled at least $159 billion, up more than 21% from the year before, according to S&P Dow Jones Indices.

The biggest overhaul of the US tax code in over 30 years, the new law slashes the corporate income tax rate to 21% from 35%, and charges multinationals a one-time tax on profits held overseas.

Meanwhile, the S&P 500 and the Dow eased on Friday after a steep drop in oil prices pressured energy stocks, but losses were limited by gains in chipmakers and retail stocks.

US crude CLc1 tumbled 4% to settle at $67.88 a barrel after Saudi Arabia and Russia said they were ready to ease supply curbs that have pushed prices to their highest since 2014.

The S&P energy index slid 2.6% and registered its biggest daily percentage drop since early February, while Chevron dropped 3.5% and Exxon Mobil fell 1.9% and were among the biggest drags on the Dow and S&P 500.

“It’s been a very rough week for oil, and that has weighed” on energy names, said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles. At the same time, the continued pullback in yields has pressured financials, he said.